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SECURITIES AND EXCHANGE COMMISSION
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
Texas (State or other jurisdiction of incorporation or organization) | 74-0484030 (I.R.S. Employer Identification Number) |
Galveston, Texas 77550-7999
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code
Sean A. Monticello
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550-7990
(409) 797-3200
Title of each class Common Stock ($1.00 par value) | Name of each exchange on which registered NASDAQ Stock Market LLC |
(Title of Class)
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo |
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Exhibit 23 |
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• | Life; |
• | Annuity; |
• | Health; |
• | Property and Casualty; and |
• | Corporate and Other. |
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• | Individual and group life insurance products, including universal life, variable universal life, whole life, and term life; and |
• | Credit life insurance. |
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• | Variable annuities; and |
• | Fixed annuities. |
• | Medicare Supplement; |
• | Supplemental insurance; |
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• | Hospital surgical; |
• | Stop-loss; and |
• | Credit disability |
• | Auto insurance; |
• | Homeowners insurance; |
• | Agribusiness and commercial insurance; and |
• | Credit property and casualty insurance. |
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• | Credit involuntary unemployment insurance, which pays a limited number of monthly payments on a loan or credit account if the borrower becomes involuntarily unemployed during the term of coverage; and |
• | Credit property insurance, which pays an amount sufficient to pay off the entire debt on a piece of property serving as collateral for the loan if the property is lost or damaged. |
• | Independent Marketing Group; |
• | Career Sales & Services Division; |
• | Multiple Line; |
• | Health/Senior Age Marketing Division; |
• | Direct Marketing; and |
• | Credit Insurance Division. |
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Primary Means of | ||||||
Segment | Marketing Channel | Companies | Distribution | |||
Life | Independent Marketing Group; Multiple Line; Career Sales & Service Division; Health/Senior Age Marketing Division; Direct Marketing; Credit Insurance Division | American National Insurance Company; Farm Family Life Insurance Company; Garden State Life Insurance Company; Standard Life and Accident Insurance Company; American National Life Insurance Company of Texas | Independent agents; Employee agents; Dedicated agents; Internet, mail, print and broadcast media; General agents | |||
Annuity | Independent Marketing Group; Multiple Line; Career Sales & Service Division; Health/Senior Age Marketing Division | American National Insurance Company; Standard Life and Accident Insurance Company | Independent agents; Employee agents; Exclusive agents | |||
Property and Casualty | Multiple Line; Credit Insurance Division | American National Insurance Company; The American National Property and Casualty Companies; The Farm Family Companies | Multiple Line: Exclusive agents and General agents; Credit Insurance Division: Independent agents | |||
Health | Career Sales & Service Division; Health/Senior Age Marketing Division; Credit Insurance Division | American National Insurance Company; Standard Life and Accident Insurance Company; American National Life Insurance Company of Texas | Employee agents; Exclusive agents; Independent agents; Managing general underwriters |
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• | A.M. Best Company: A (Excellent)(1) |
• | Standard & Poor’s: AA- (Very Strong)(2) |
(1) | A.M. Best’s active company rating scale consists of thirteen ratings ranging from A++ (Superior) to D (poor). A is the third highest of such thirteen ratings and represents companies’ “excellent ability to meet their ongoing insurance obligations.” | |
(2) | Standard & Poor’s active company rating scale ranges from AAA (Extremely Strong) to CC (Extremely Weak). Plus (+) or Minus (-) modifiers show the relative standing within the categories from AA to CCC. A rating of AA is in the “very strong” category and represents “very strong financial security characteristics, differing only slightly from those rated higher.” AA- is the fourth highest of twenty active company ratings. |
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• | The composition of our Board of Directors, subject to applicable legal and regulatory requirements, and through the Board of Directors, any determination with respect to our business direction and policies, including the appointment and removal of officers; |
• | Any determinations with respect to mergers or other business combinations; |
• | Our acquisition and disposition of assets; and |
• | Any other matters submitted for stockholder approval. |
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• | reducing new sales of insurance products, annuities, and investment products; |
• | adversely affecting our relationships with our sales force and independent sales intermediaries; |
• | materially increasing the number or amount of policy surrenders and withdrawals by policyholders and contractholders; |
• | requiring us to reduce prices for many of our products and services to remain competitive; |
• | adversely affecting our ability to obtain reinsurance at reasonable prices or at all; and |
• | adversely affecting our relationships with credit counterparties. |
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• | licensing companies and agents to transact business; |
• | calculating the value of assets to determine compliance with statutory requirements; |
• | restricting the size of risks that may be insured under a single contract; |
• | mandating certain insurance benefits; |
• | regulating certain premium rates; |
• | reviewing and approving policy forms and reports of financial condition required to be filed; |
• | regulating unfair trade and claims practices, including imposing restrictions on marketing and sales practices, distribution arrangements, and payment of inducements; |
• | regulating advertising; |
• | protecting privacy; |
• | establishing statutory capital and reserve requirements and solvency standards; |
• | determining methods of accounting; |
• | fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; |
• | approving changes in control of insurance companies; |
• | restricting the payment of dividends and other transactions between affiliates; and |
• | regulating the types, amounts and valuation of investments. |
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(and its subsidiaries)
(dollar amounts in millions, except per | Quarter ended March 31, | Year ended December 31, | ||||||||||||||||||||||||||
share amounts, or unless otherwise noted) | 2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||
Revenues | 652 | 724 | 2,519 | 3,056 | 3,105 | 3,036 | 2,871 | |||||||||||||||||||||
Income (loss) from continuing operations | (48 | ) | 40 | (173 | ) | 246 | 279 | 243 | 262 | |||||||||||||||||||
Net income | (48 | ) | 39 | (154 | ) | 241 | 273 | 236 | 256 | |||||||||||||||||||
Per common share | ||||||||||||||||||||||||||||
Income (loss) from continuing operations — basic | (1.80 | ) | 1.52 | (6.52 | ) | 9.28 | 10.53 | 9.18 | 9.91 | |||||||||||||||||||
Income (loss) from continuing operations — diluted | (1.80 | ) | 1.51 | (6.52 | ) | 9.22 | 10.48 | 9.14 | 9.88 | |||||||||||||||||||
Net income (loss) — basic | (1.80 | ) | 1.47 | (5.82 | ) | 9.09 | 10.32 | 8.91 | 9.65 | |||||||||||||||||||
Net income (loss) — diluted | (1.80 | ) | 1.46 | (5.82 | ) | 9.04 | 10.27 | 8.87 | 9.63 | |||||||||||||||||||
Cash dividends per share | 0.77 | 0.77 | 3.08 | 3.05 | 3.01 | 2.97 | 2.96 | |||||||||||||||||||||
Selected data | ||||||||||||||||||||||||||||
Return on equity | (2.0) | % | 2.7 | % | (14.0) | % | 6.9 | % | 8.2 | % | 4.7 | % | 8.4 | % | ||||||||||||||
Dividend payout ratio | N/A | 48.2 | % | N/A | 38.1 | % | 38.7 | % | 43.9 | % | 35.8 | % | ||||||||||||||||
Balance at March 31, | Balance at December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Total assets | 18,821 | 18,379 | 18,379 | 18,461 | 17,932 | 17,493 | 16,571 | |||||||||||||||||||||
Total shareholders’ equity | 3,060 | 3,142 | 3,134 | 3,737 | 3,575 | 3,378 | 3,296 |
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AND RESULTS OF OPERATIONS
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• | net premiums earned on individual term and whole life insurance, property and casualty insurance, credit insurance, health insurance and single premium immediate annuity products; |
• | net investment income; and |
• | insurance and investment product fees and other income, including surrender charges, mortality and expense risk charges, primarily from variable life and annuity, deferred annuities, and universal life insurance policies, management fees and commissions from other investment products, and other administrative charges. |
• | benefits provided to policyholders and contract holders and changes in reserves held for future benefits; |
• | interest credited on account balances; |
• | acquisition and operating expenses, including commissions, marketing expenses, policy and contract servicing costs, overhead and other general expenses that are not capitalized (shown net of deferrals); |
• | amortization of deferred policy acquisition costs and other intangible assets; and |
• | income taxes. |
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• | We have a project under way to establish a New York insurance subsidiary. We anticipate that sales will begin through this new company in the fourth quarter of 2009. A full portfolio of annuity products will be available for sale once the subsidiary is established, followed in subsequent years by our life products. Initial sales are anticipated through independent agents. Based on competitors’ market experience, we expect annuity deposits from this subsidiary to represent five to ten percent of total deposits received. |
• | Sales of traditional life insurance products through our Career Sales and Services Division are expected to remain relatively flat through 2009. To offset the slower sales growth, we will continue to focus on policy persistency and expense management. |
• | We have repositioned the competitiveness of life products sold through our Independent Marketing Group, particularly at older ages. While this repositioning has resulted in a slowing of sales in the last quarter of 2008, it has and will help improve the predicted profitability of these products in 2009 and beyond. |
• | We believe there will be a continuing shift in sales emphasis to utilizing the Internet, endorsed direct mail and innovative product/distribution combinations. Although we expect our direct sales of life insurance products in 2009 to exhibit slower growth, we will continue to sell traditional life insurance products (term life and whole life) through our Internet and third-party marketing distribution channels. Additional national partners were added during 2007, and marketing programs with these partners increased during 2008. |
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• | Deferred acquisition costs; |
• | Reserves; |
• | Reinsurance recoverable; |
• | Pension and postretirement benefit plans; |
• | Other-than-temporary impairment of investment securities; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Year Ended December 31, 2008 | ||||
Increase / (Reduction) in DAC | ||||
(in thousands) | ||||
Increase in future investment margins of 25 basis points | $ | 25,729 | ||
Decrease in future investment margins of 25 basis points | $ | (29,835 | ) | |
Decrease in future life mortality by 1% | $ | 1,636 | ||
Increase in future life mortality by 1% | $ | (1,679 | ) |
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• | Case reserves — cost of claims that were reported to us but not yet paid, and |
• | Reserves for IBNR — anticipated cost of claims incurred but not reported. IBNR reserves include a provision for potential development on case reserves, losses on claims currently closed which may reopen in the future as well as claims which have been incurred but not yet reported. |
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Gross | Ceded | Net | Gross | Ceded | Net | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Case | $ | 475,738 | $ | 47,888 | $ | 427,850 | $ | 458,166 | $ | 45,226 | $ | 412,940 | ||||||||||||
IBNR | 437,275 | 17,265 | 420,010 | 407,285 | 10,725 | 396,560 | ||||||||||||||||||
Total | $ | 913,013 | $ | 65,153 | $ | 847,860 | $ | 865,451 | $ | 55,951 | $ | 809,500 | ||||||||||||
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• | Initial Expected Loss Ratio method: This method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each accident year. This method is appropriate for classes of business where the actual paid or reported loss experience is not yet mature enough to override our initial expectations of the ultimate loss ratios. |
• | Bornhuetter Ferguson: This method uses as a starting point an assumed initial expected loss ratio method and blends in the loss ratio implied by the claims experience to date by using loss development patterns based on our own historical experience. This method is generally appropriate where there are few reported claims and a relatively less stable pattern of reported losses. |
• | Loss or Expense Development (Chain Ladder): This method uses actual loss or defense and cost containment expense data and the historical development profiles on older accident periods to project more recent, less developed periods to their ultimate position. This method is appropriate when there is a relatively stable pattern of loss and expense emergence and a relatively large number of reported claims. |
• | Ratio of Paid Defense and Cost Containment Expense to Paid Loss Development: This method uses the ratio of paid defense and cost containment expense to paid loss data and the historical development profiles on older accident periods to project more recent, less developed periods to their ultimate position. In this method, an ultimate ratio of paid defense and cost containment expense to paid loss is selected for each accident period. The selected paid defense and cost containment expense to paid loss ratio is then applied to the selected ultimate loss for each accident period to estimate the ultimate defense and cost containment expense. Paid defense and cost containment expense is then subtracted from the ultimate defense and cost containment expense to calculate the unpaid defense and cost containment expense for that accident period. |
• | Calendar Year Paid Adjusting and Other Expense to Paid Loss: This method uses the ratio of prior calendar years’ paid expense to paid loss to project ultimate loss adjustment expenses for adjusting and other expense. The key to this method is the selection of the paid expense to paid loss ratio based on prior calendar years’ activity. A percentage of the selected ratio is applied to the case reserves (depending on the line of insurance) and 100% to the indicated IBNR reserves. These ratios assume a percentage of the expense is incurred when a claim is opened and the remaining percentage is paid throughout the claim’s life. |
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• | The selected loss ratio used in the initial expected loss ratio method and Bornhuetter Ferguson method for each accident year; |
• | The expected loss development profiles; |
• | A consistent claims handling process; |
• | A consistent payout pattern; |
• | No unusual growth patterns; |
• | No major shift in liability limits distribution on liability policies; and |
• | No significantly prospective changes in workers’ compensation laws that would significantly affect future payouts. |
Change in Reporting Pattern | ||||||||
Line of Business | One Month Faster | One Month Slower | ||||||
(in thousands) | ||||||||
Auto | (9,220 | ) | 44,584 | |||||
Homeowner | (1,064 | ) | 12,355 | |||||
Agribusiness | (1,718 | ) | 9,979 | |||||
Other | (5,142 | ) | 8,273 |
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Year Ended December 31, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
Used for Net Benefit | Used for Net Benefit | |||||||||||||||
Cost in Fiscal Year | Used for Benefit | Cost in Fiscal Year | Used for Benefit | |||||||||||||
1/1/2008 to | Obligations as of | 1/1/2007 to | Obligations as of | |||||||||||||
12/31/2008 | 12/31/2008 | 12/31/2007 | 12/31/2007 | |||||||||||||
Discount rate | 6.10 | % | 6.17 | % | 5.75 | % | 6.10 | % | ||||||||
Rate of compensation increase | 4.20 | % | 4.20 | % | 3.75 | % | 4.20 | % | ||||||||
Long-term rate of return | 7.65 | % | 7.65 | % | 7.65 | % | 7.65 | % |
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||
2008 | 2007 | 2006 | 2009 | 2008 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 1,888,495 | $ | 1,999,623 | $ | 1,977,634 | $ | 479,717 | $ | 490,597 | ||||||||||
Other Policy Revenues | 174,899 | 155,230 | 139,605 | 43,680 | 42,066 | |||||||||||||||
Net Investment Income | 796,177 | 812,969 | 836,017 | 193,196 | 187,588 | |||||||||||||||
Gain/(Loss) from sale of investments, net | (379,709 | ) | 41,027 | 100,256 | (73,461 | ) | (5,585 | ) | ||||||||||||
Other Income | 38,779 | 47,224 | 51,107 | 8,865 | 9,413 | |||||||||||||||
Total Premiums & Other Revenues | 2,518,641 | 3,056,073 | 3,104,619 | 651,997 | 724,079 | |||||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Policy Benefits | 1,601,854 | 1,551,698 | 1,514,168 | 429,747 | 399,906 | |||||||||||||||
Interest credited to policy account balances | 299,833 | 295,894 | 297,551 | 81,588 | 67,147 | |||||||||||||||
Commissions | 475,345 | 456,537 | 423,291 | 112,915 | 125,270 | |||||||||||||||
Other operating costs and expenses | 508,800 | 465,140 | 455,937 | 111,160 | 117,545 | |||||||||||||||
Change in deferred policy acquisition costs | (67,439 | ) | (60,442 | ) | 8,385 | (6,633 | ) | (28,731 | ) | |||||||||||
Total Benefits and Expenses | 2,818,393 | 2,708,827 | 2,699,332 | 728,777 | 681,137 | |||||||||||||||
Income/(loss) before other items and federal income taxes | $ | (299,752 | ) | $ | 347,246 | $ | 405,287 | $ | (76,780 | ) | $ | 42,942 | ||||||||
• | Investment losses realized during the year, including $367.0 million in other-than-temporary impairment write-downs; and |
• | Lower sales of our single premium immediate annuity products, caused by the drop in interest rates, which made the product less competitive. |
• | Lower premiums due to a trend towards interest sensitive products; |
• | Lower investment income due to decreasing yields on securities; and |
• | Investment losses realized during the year, including $7.2 million in other-than-temporary impairment write-downs. |
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• | Increased premium revenues from the increased sales of single premium immediate annuities, including a small group of very large policies representing approximately $49.8 million of premiums; and |
• | Increase in other policy revenues due to increased sales of universal life products. |
• | Increase in benefits paid on the growing block of Annuity business; |
• | The impact of increased catastrophe losses in our Property and Casualty business; and |
• | Additional operating expenses incurred due to non-recurring litigation costs and costs for preparing for compliance with SEC and Sarbanes-Oxley requirements. |
• | Investment losses realized during the three months ended March 31, 2009, including $68.1 million in other-than-temporary impairment write-downs; |
• | Lower sales in the Life segment; and |
• | Lower earned premiums in the Property and Casualty segment. |
• | Increased catastrophe losses in our Property and Casualty business; |
• | Increased benefits paid in our Health business; and |
• | Additional operating expenses incurred due to costs for preparing for compliance with the SEC and Sarbanes-Oxley Act of 2004 requirements. |
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 299,338 | $ | 315,893 | $ | 327,594 | $ | (16,555 | ) | $ | (11,701 | ) | ||||||||
Other Policy Revenues | 154,984 | 130,744 | 115,082 | 24,240 | 15,662 | |||||||||||||||
Net Investment Income | 226,643 | 229,092 | 231,414 | (2,449 | ) | (2,322 | ) | |||||||||||||
Other Income | 3,767 | 3,967 | 4,577 | (200 | ) | (610 | ) | |||||||||||||
Total Revenues | 684,732 | 679,696 | 678,667 | 5,036 | 1,029 | |||||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Policy Benefits | 296,078 | 273,750 | 280,203 | 22,328 | (6,453 | ) | ||||||||||||||
Interest credited to policy account balances | 62,221 | 63,289 | 66,910 | (1,068 | ) | (3,621 | ) | |||||||||||||
Commissions | 126,813 | 141,517 | 96,612 | (14,704 | ) | 44,905 | ||||||||||||||
Other operating costs and expenses | 222,908 | 200,361 | 185,752 | 22,547 | 14,609 | |||||||||||||||
Change in deferred policy acquisition costs | (42,103 | ) | (57,666 | ) | 4,233 | 15,563 | (61,899 | ) | ||||||||||||
Total Benefits and Expenses | 665,917 | 621,251 | 633,710 | 44,666 | (12,459 | ) | ||||||||||||||
Income before other items and federal income taxes | $ | 18,815 | $ | 58,445 | $ | 44,957 | $ | (39,630 | ) | $ | 13,488 | |||||||||
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As of December 31, | Increase / (Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Life Insurance in-force: | ||||||||||||||||||||
Traditional life | $ | 46,473,285 | $ | 46,072,374 | $ | 45,050,586 | $ | 400,911 | $ | 1,021,788 | ||||||||||
Interest sensitive life | 23,397,571 | 22,610,693 | 20,940,233 | 786,878 | 1,670,460 | |||||||||||||||
Total life insurance in-force | $ | 69,870,856 | $ | 68,683,067 | $ | 65,990,819 | $ | 1,187,789 | $ | 2,692,248 | ||||||||||
As of December 31, | Increase / (Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
Number of policies: | ||||||||||||||||||||
Traditional life | 2,453,270 | 2,607,552 | 2,712,894 | (154,282 | ) | (105,342 | ) | |||||||||||||
Interest sensitive life | 174,031 | 175,088 | 174,243 | (1,057 | ) | 845 | ||||||||||||||
Total life insurance policies | 2,627,301 | 2,782,640 | 2,887,137 | (155,339 | ) | (104,497 | ) | |||||||||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 129,031 | $ | 144,936 | $ | 85,871 | ||||||
Amortization of DAC | (86,928 | ) | (87,270 | ) | (90,104 | ) | ||||||
Change in DAC | $ | 42,103 | $ | 57,666 | $ | (4,233 | ) | |||||
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Reserves | Premiums | |||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Reinsurance Assumed | $ | 25,553 | $ | 28,413 | $ | 26,321 | $ | 8,460 | $ | 10,355 | $ | 10,646 | ||||||||||||
Reinsurance Ceded | (147,523 | ) | (124,316 | ) | (101,087 | ) | (80,826 | ) | (66,068 | ) | (55,710 | ) | ||||||||||||
Total | $ | (121,970 | ) | $ | (95,903 | ) | $ | (74,766 | ) | $ | (72,366 | ) | $ | (55,713 | ) | $ | (45,064 | ) | ||||||
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Ceded premiums | Percentage of | |||||||||||
for 2008 | Total Gross | |||||||||||
Reinsurer | AM Best Rating | (in thousands) | Premium | |||||||||
Swiss Re Life & Health of America | A+ | $ | 20,256 | 5.3 | % | |||||||
Transamerica Life Insurance Company | A+ | 11,788 | 3.1 | % | ||||||||
Munich American Reassurance Company | A+ | 9,369 | 2.5 | % | ||||||||
Revios/SCOR | A- | 6,414 | 1.7 | % | ||||||||
Canada Life Reinsurance | A+ | 4,723 | 1.2 | % | ||||||||
General Re Life Corporation | A++ | 3,824 | 1.0 | % | ||||||||
Other reinsurers with no single company greater than 1% of the total | 24,452 | 6.4 | % | |||||||||
Total life reinsurance ceded | $ | 80,826 | 21.3 | % | ||||||||
Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 70,090 | $ | 74,155 | $ | (4,065 | ) | |||||
Other Policy Revenues | 40,194 | 36,809 | 3,385 | |||||||||
Net Investment Income | 55,289 | 56,047 | (758 | ) | ||||||||
Other Income | 869 | 871 | (2 | ) | ||||||||
Total Revenues | 166,442 | 167,882 | (1,440 | ) | ||||||||
Benefits And Expenses: | ||||||||||||
Policy Benefits | 73,949 | 71,966 | 1,983 | |||||||||
Interest credited to policy account balances | 14,006 | 16,173 | (2,167 | ) | ||||||||
Commissions | 21,802 | 33,321 | (11,519 | ) | ||||||||
Other operating costs and expenses | 47,085 | 51,000 | (3,915 | ) | ||||||||
Change in deferred policy acquisition costs | (99 | ) | (15,537 | ) | 15,438 | |||||||
Total Benefits and Expenses | 156,743 | 156,923 | (180 | ) | ||||||||
Income before other items and federal income taxes | $ | 9,699 | $ | 10,959 | $ | (1,260 | ) | |||||
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As of March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Life Insurance in-force: | ||||||||||||
Traditional life | $ | 46,124,275 | $ | 46,155,842 | $ | (31,567 | ) | |||||
Interest sensitive life | 23,351,121 | 22,957,310 | 393,811 | |||||||||
Total life insurance in-force | $ | 69,475,396 | $ | 69,113,152 | $ | 362,244 | ||||||
As of March 31, | Increase/ | ||||||||||||||
2009 | 2008 | (Decrease) | |||||||||||||
Number of policies: | |||||||||||||||
Traditional life | 2,418,838 | 2,569,729 | (150,891 | ) | |||||||||||
Interest sensitive life | 173,835 | 175,292 | (1,457 | ) | |||||||||||
Total life insurance policies | 2,592,673 | 2,745,021 | (152,348 | ) | |||||||||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 18,323 | $ | 34,357 | $ | (16,034 | ) | |||||
Amortization of DAC | (18,224 | ) | (18,820 | ) | 596 | |||||||
Change in DAC | $ | 99 | $ | 15,537 | $ | (15,438 | ) | |||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 116,248 | $ | 222,748 | $ | 112,455 | $ | (106,500 | ) | $ | 110,293 | |||||||||
Other Policy Revenues | 19,915 | 24,486 | 24,523 | (4,571 | ) | (37 | ) | |||||||||||||
Net Investment Income | 374,023 | 364,607 | 353,157 | 9,416 | 11,450 | |||||||||||||||
Other Income | (5,718 | ) | 345 | (595 | ) | (6,063 | ) | 940 | ||||||||||||
Total Revenues | 504,468 | 612,186 | 489,540 | (107,718 | ) | 122,646 | ||||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Policy Benefits | 142,867 | 249,878 | 135,384 | (107,011 | ) | 114,494 | ||||||||||||||
Interest credited to policy account balances | 237,612 | 232,605 | 230,641 | 5,007 | 1,964 | |||||||||||||||
Commissions | 79,213 | 58,635 | 53,966 | 20,578 | 4,669 | |||||||||||||||
Other operating costs and expenses | 45,491 | 35,030 | 33,139 | 10,461 | 1,891 | |||||||||||||||
Change in deferred policy acquisition costs | (20,690 | ) | (911 | ) | 3,475 | (19,779 | ) | (4,386 | ) | |||||||||||
Total Benefits and Expenses | 484,493 | 575,237 | 456,605 | (90,744 | ) | 118,632 | ||||||||||||||
Income before other items and federal income taxes | $ | 19,975 | $ | 36,949 | $ | 32,935 | $ | (16,974 | ) | $ | 4,014 | |||||||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Fixed Deferred Annuity | $ | 1,553,431 | $ | 755,216 | $ | 710,375 | $ | 798,215 | $ | 44,841 | ||||||||||
Equity Indexed Deferred Annuity | 85,334 | 90,327 | 78,658 | (4,993 | ) | 11,669 | ||||||||||||||
Variable Deferred Annuity | 103,233 | 119,507 | 90,173 | (16,274 | ) | 29,334 | ||||||||||||||
Single Premium Immediate Annuity | 141,758 | 261,413 | 165,420 | (119,655 | ) | 95,993 | ||||||||||||||
Total | $ | 1,883,756 | $ | 1,226,463 | $ | 1,044,626 | $ | 657,293 | $ | 181,837 | ||||||||||
Less: Policy Deposits | (1,767,508 | ) | (1,003,715 | ) | (932,171 | ) | (763,793 | ) | (71,544 | ) | ||||||||||
Total Earned Premiums | $ | 116,248 | $ | 222,748 | $ | 112,455 | $ | (106,500 | ) | $ | 110,293 | |||||||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||
2008 | 2007 | 2008 vs. 2007 | ||||||||||
(in thousands) | ||||||||||||
Derivative hedge gain / (loss) | $ | (24,400 | ) | $ | (141 | ) | $ | (24,259 | ) | |||
Embedded derivative gain / (loss) | $ | 23,184 | $ | 434 | $ | 22,750 | ||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Fixed Deferred Annuity | ||||||||||||
Interest Spread: | ||||||||||||
Dollar Amount | $ | 102,062 | $ | 99,376 | $ | 94,725 | ||||||
Annualized Rate | 1.55 | % | 1.61 | % | 1.56 | % | ||||||
Variable Deferred Annuity | ||||||||||||
Mortality & Expense Charge: | ||||||||||||
Dollar Amount | $ | 4,581 | $ | 4,498 | $ | 3,586 | ||||||
Annualized Rate | 1.24 | % | 1.18 | % | 1.20 | % | ||||||
Single Premium Immediate Annuity (SPIA) | ||||||||||||
Gross Margins Including Mortality: | ||||||||||||
Dollar Amount | $ | 2,981 | $ | 5,454 | $ | 2,838 | ||||||
Annualized Rate | 0.43 | % | 0.87 | % | 0.54 | % | ||||||
Total Annuity: | ||||||||||||
Gross Margins Including SPIA Mortality: | ||||||||||||
Dollar Amount | $ | 109,624 | $ | 109,328 | $ | 101,149 | ||||||
Annualized Rate | 1.51 | % | 1.56 | % | 1.52 | % |
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Fixed Deferred Annuity: | ||||||||||||
Account value, beginning of period | $ | 6,210,456 | $ | 6,121,475 | $ | 6,015,019 | ||||||
Net inflows (outflows) | 487,410 | (123,195 | ) | (102,715 | ) | |||||||
Fees | (15,363 | ) | (19,899 | ) | (20,921 | ) | ||||||
Interest credited | 235,862 | 232,075 | 230,092 | |||||||||
Account value, end of period | $ | 6,918,365 | $ | 6,210,456 | $ | 6,121,475 | ||||||
Variable Deferred Annuity: | ||||||||||||
Account value, beginning of period | $ | 429,505 | $ | 331,971 | $ | 265,467 | ||||||
Net inflows | 24,364 | 66,571 | 34,602 | |||||||||
Fees | (4,582 | ) | (4,498 | ) | (3,586 | ) | ||||||
Change in market value and other | (140,276 | ) | 35,461 | 35,488 | ||||||||
Account value, end of period | $ | 309,011 | $ | 429,505 | $ | 331,971 | ||||||
Single Premium Immediate Annuity: | ||||||||||||
Reserve, beginning of period | $ | 693,137 | $ | 557,866 | $ | 502,904 | ||||||
Net inflows (outflows) | (26,330 | ) | 107,861 | 30,526 | ||||||||
Interest and mortality | 34,334 | 27,410 | 24,436 | |||||||||
Reserve, end of period | $ | 701,141 | $ | 693,137 | $ | 557,866 | ||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 96,544 | $ | 71,723 | $ | 65,149 | ||||||
Amortization of DAC | (75,854 | ) | (70,812 | ) | (68,624 | ) | ||||||
Change in DAC | $ | 20,690 | $ | 911 | $ | (3,475 | ) | |||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 37,216 | $ | 44,299 | $ | (7,083 | ) | |||||
Other Policy Revenues | 3,486 | 5,257 | (1,771 | ) | ||||||||
Net Investment Income | 99,832 | 83,980 | 15,852 | |||||||||
Other Income | (732 | ) | (2,319 | ) | 1,587 | |||||||
Total Revenues | 139,802 | 131,217 | 8,585 | |||||||||
Benefits And Expenses: | ||||||||||||
Policy Benefits | 43,657 | 49,750 | (6,093 | ) | ||||||||
Interest credited to policy account balances | 67,582 | 50,974 | 16,608 | |||||||||
Commissions | 26,244 | 25,364 | 880 | |||||||||
Other operating costs and expenses | 13,777 | 11,200 | 2,577 | |||||||||
Change in deferred policy acquisition costs | (12,048 | ) | (11,251 | ) | (797 | ) | ||||||
Total Benefits and Expenses | 139,212 | 126,037 | 13,175 | |||||||||
Income before other items and federal income taxes | $ | 590 | $ | 5,180 | $ | (4,590 | ) | |||||
Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Fixed Deferred Annuity | $ | 564,016 | $ | 547,229 | $ | 16,787 | ||||||
Equity Indexed Deferred Annuity | 23,397 | 20,481 | 2,916 | |||||||||
Variable Deferred Annuity | 21,966 | 33,617 | (11,651 | ) | ||||||||
Single Premium Immediate Annuity | 38,250 | 45,120 | (6,870 | ) | ||||||||
Total | 647,629 | 646,447 | 1,182 | |||||||||
Less: Policy Deposits | (610,413 | ) | (602,148 | ) | (8,265 | ) | ||||||
Total Earned Premiums | $ | 37,216 | $ | 44,299 | $ | (7,083 | ) | |||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Derivative hedge (loss) | $ | (3,857 | ) | $ | (9,190 | ) | $ | 5,333 | ||||
Embedded derivative gain | $ | 2,263 | $ | 9,997 | $ | (7,734 | ) | |||||
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
(in thousands) | ||||||||
Fixed Deferred Annuity | ||||||||
Interest Spread: | ||||||||
Dollar Amount | $ | 25,234 | $ | 23,715 | ||||
Annualized Rate | 1.42 | % | 1.48 | % | ||||
Variable Deferred Annuity | ||||||||
Mortality & Expense Charge: | ||||||||
Dollar Amount | $ | 893 | $ | 1,192 | ||||
Annualized Rate | 1.18 | % | 1.15 | % | ||||
Single Premium Immediate Annuity | ||||||||
Gross Margins Including Mortality: | ||||||||
Dollar Amount | $ | 1,295 | $ | 502 | ||||
Annualized Rate | 0.73 | % | 0.29 | % | ||||
Total Annuity: | ||||||||
Gross Margins Including SPIA Mortality: | ||||||||
Dollar Amount | $ | 27,422 | $ | 25,409 | ||||
Annualized Rate | 1.38 | % | 1.44 | % |
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
(in thousands) | ||||||||
Fixed Deferred Annuity: | ||||||||
Account value, beginning of period | $ | 6,918,365 | $ | 6,210,456 | ||||
Net inflows | 275,324 | 337,696 | ||||||
Fees | (2,596 | ) | (4,074 | ) | ||||
Interest credited | 67,025 | 50,454 | ||||||
Account value, end of period | $ | 7,258,118 | $ | 6,594,532 | ||||
Variable Deferred Annuity: | ||||||||
Account value, beginning of period | $ | 309,011 | $ | 429,505 | ||||
Net inflows | 4,433 | 5,373 | ||||||
Fees | (893 | ) | (1,192 | ) | ||||
Change in market value and other | (14,847 | ) | (35,357 | ) | ||||
Account value, end of period | $ | 297,704 | $ | 398,329 | ||||
Single Premium Immediate Annuity: | ||||||||
Reserve, beginning of period | $ | 701,141 | $ | 693,137 | ||||
Net inflows | 2,632 | 9,380 | ||||||
Interest and mortality | 7,873 | 8,502 | ||||||
Reserve, end of period | $ | 711,646 | $ | 711,019 | ||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 30,399 | $ | 29,305 | $ | 1,094 | ||||||
Amortization of DAC | (18,351 | ) | (18,054 | ) | (297 | ) | ||||||
Change in DAC | $ | 12,048 | $ | 11,251 | $ | 797 | ||||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 290,883 | $ | 283,765 | $ | 303,285 | $ | 7,118 | $ | (19,520 | ) | |||||||||
Net Investment Income | 16,566 | 16,710 | 18,964 | (144 | ) | (2,254 | ) | |||||||||||||
Other Income | 13,252 | 13,048 | 17,204 | 204 | (4,156 | ) | ||||||||||||||
Total Revenues | 320,701 | 313,523 | 339,453 | 7,178 | (25,930 | ) | ||||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Policy Benefits | 223,055 | 209,840 | 216,775 | 13,215 | (6,935 | ) | ||||||||||||||
Commissions | 43,219 | 39,342 | 42,097 | 3,877 | (2,755 | ) | ||||||||||||||
Other operating costs and expenses | 69,961 | 57,975 | 61,699 | 11,986 | (3,724 | ) | ||||||||||||||
Change in deferred policy acquisition costs | 5,023 | 5,774 | 6,131 | (751 | ) | (357 | ) | |||||||||||||
Total Benefits and Expenses | 341,258 | 312,931 | 326,702 | 28,327 | (13,771 | ) | ||||||||||||||
Income/(loss) from operations before other items and federal income taxes | $ | (20,557 | ) | $ | 592 | $ | 12,751 | $ | (21,149 | ) | $ | (12,159 | ) | |||||||
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Year Ended December 31, 2008 | ||||||||||||||||
Premiums | Certificates / Policies | |||||||||||||||
Amount | Percentage | Number | Percentage | |||||||||||||
(in thousands except certificates/policies) | ||||||||||||||||
Medicare Supplement | $ | 120,757 | 41.5 | % | 60,264 | 8.2 | % | |||||||||
Managing General Underwriter | 13,160 | 4.5 | 124,829 | 17.0 | ||||||||||||
Group | 33,758 | 11.7 | 21,409 | 2.9 | ||||||||||||
Major Medical | 38,951 | 13.4 | 4,884 | 0.7 | ||||||||||||
Hospital Surgical | 39,340 | 13.5 | 15,468 | 2.1 | ||||||||||||
Long Term Care | 2,719 | 0.9 | 2,055 | 0.3 | ||||||||||||
Supplemental Insurance | 8,213 | 2.8 | 47,133 | 6.4 | ||||||||||||
Credit Accident and Health | 24,676 | 8.5 | 323,158 | 44.0 | ||||||||||||
All Other | 9,309 | 3.2 | 135,921 | 18.4 | ||||||||||||
Total | $ | 290,883 | 100.0 | % | 735,121 | 100.0 | % | |||||||||
Year Ended December 31, 2007 | ||||||||||||||||
Premiums | Certificates / Policies | |||||||||||||||
Amount | Percentage | Number | Percentage | |||||||||||||
(in thousands except certificates/policies) | ||||||||||||||||
Medicare Supplement | $ | 114,283 | 40.3 | % | 57,162 | 7.5 | % | |||||||||
Managing General Underwriter | 15,054 | 5.3 | 139,683 | 18.4 | ||||||||||||
Group | 33,492 | 11.8 | 20,882 | 2.8 | ||||||||||||
Major Medical | 49,313 | 17.4 | 7,509 | 1.0 | ||||||||||||
Hospital Surgical | 24,228 | 8.5 | 10,526 | 1.4 | ||||||||||||
Long Term Care | 3,437 | 1.2 | 2,229 | 0.3 | ||||||||||||
Supplemental Insurance | 8,574 | 3.0 | 51,409 | 6.8 | ||||||||||||
Credit Accident and Health | 25,471 | 9.0 | 319,285 | 42.2 | ||||||||||||
All Other | 9,913 | 3.5 | 148,780 | 19.6 | ||||||||||||
Total | $ | 283,765 | 100.0 | % | 757,465 | 100.0 | % | |||||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 22,762 | $ | 18,735 | $ | 16,799 | ||||||
Amortization of DAC | (27,785 | ) | (24,509 | ) | (22,930 | ) | ||||||
Change in DAC | $ | (5,023 | ) | $ | (5,774 | ) | $ | (6,131 | ) | |||
Ceded premiums | Percentage of | |||||||||||
for 2008 | Total Gross | |||||||||||
Reinsurer | AM Best Rating | (in thousands) | Premium | |||||||||
Motors Ins Corp | A | - | $ | 58,141 | 13.1 | % | ||||||
Transatlantic Re | A | 23,134 | 5.2 | % | ||||||||
Munich American Reinsurance Company | A | + | 17,009 | 3.8 | % | |||||||
Platinum Underwriters Reinsurance Co. | A | 10,476 | 2.4 | % | ||||||||
Other reinsurers with no single company greater than 2% of the total | 44,841 | 10.1 | % | |||||||||
Total health reinsurance ceded | $ | 153,601 | 34.6 | % | ||||||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 79,922 | $ | 72,037 | $ | 7,885 | ||||||
Net Investment Income | 4,025 | 4,064 | (39 | ) | ||||||||
Other Income | 2,928 | 3,330 | (402 | ) | ||||||||
Total Revenues | 86,875 | 79,431 | 7,444 | |||||||||
Benefits And Expenses: | ||||||||||||
Policy Benefits | 64,067 | 60,579 | 3,488 | |||||||||
Commissions | 12,883 | 9,517 | 3,366 | |||||||||
Other operating costs and expenses | 15,703 | 15,063 | 640 | |||||||||
Change in deferred policy acquisition costs | 2,462 | 2,689 | (227 | ) | ||||||||
Total Benefits and Expenses | 95,115 | 87,848 | 7,267 | |||||||||
(Loss) from operations before other items and federal income taxes | $ | (8,240 | ) | $ | (8,417 | ) | $ | 177 | ||||
As of March 31, 2009 | ||||||||||||||||
Premiums | Certificates / Policies | |||||||||||||||
Dollars | Percentage | Number | Percentage | |||||||||||||
(in thousands except certificates/policies) | ||||||||||||||||
Medicare Supplement | $ | 30,215 | 37.8 | % | 59,596 | 8.7 | % | |||||||||
Managing General Underwriter | 11,249 | 14.1 | 117,322 | 17.1 | ||||||||||||
Group | 7,094 | 8.9 | 19,391 | 2.8 | ||||||||||||
Major Medical | 8,200 | 10.3 | 4,452 | 0.6 | ||||||||||||
Hospital Surgical | 12,182 | 15.2 | 15,893 | 2.5 | ||||||||||||
Long Term Care | 529 | 0.7 | 2,007 | 0.3 | ||||||||||||
Supplemental Insurance | 2,145 | 2.7 | 98,973 | 14.4 | ||||||||||||
Credit Accident and Health | 6,062 | 7.6 | 317,126 | 46.2 | ||||||||||||
All Other | 2,246 | 2.7 | 50,695 | 7.4 | ||||||||||||
Total | $ | 79,922 | 100.0 | % | 685,455 | 100.0 | % | |||||||||
As of March 31, 2008 | ||||||||||||||||
Premiums | Certificates / Policies | |||||||||||||||
Dollars | Percentage | Number | Percentage | |||||||||||||
(in thousands except certificates/policies) | ||||||||||||||||
Medicare Supplement | $ | 29,205 | 40.5 | % | 57,058 | 8.0 | % | |||||||||
Managing General Underwriter | 3,222 | 4.5 | 135,520 | 19.0 | ||||||||||||
Group | 9,374 | 13.0 | 19,929 | 2.8 | ||||||||||||
Major Medical | 10,756 | 14.9 | 6,818 | 1.0 | ||||||||||||
Hospital Surgical | 8,030 | 11.1 | 11,922 | 1.7 | ||||||||||||
Long Term Care | 817 | 1.1 | 2,179 | 0.2 | ||||||||||||
Supplemental Insurance | 2,220 | 3.1 | 114,683 | 16.0 | ||||||||||||
Credit Accident and Health | 6,201 | 8.6 | 311,313 | 43.5 | ||||||||||||
All Other | 2,212 | 3.2 | 55,465 | 7.8 | ||||||||||||
Total | $ | 72,037 | 100.0 | % | 714,887 | 100.0 | % | |||||||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Acquisition costs capitalized | $ | 4,477 | $ | 7,125 | $ | (2,648 | ) | |||||
Amortization of DAC | (6,939 | ) | (9,814 | ) | 2,875 | |||||||
Change in DAC | $ | (2,462 | ) | $ | (2,689 | ) | $ | 227 | ||||
• | Loss and loss adjustment expense ratio (“loss ratio”), which is calculated by dividing policy benefits by net premiums earned; | ||
• | Underwriting expense ratio (“expense ratio”), which is calculated by dividing all expenses related to the issuance of new and renewal policies by net premiums earned; and | ||
• | Combined ratio, which is the sum of the loss ratio and the expense ratio. |
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Net premiums written | $ | 1,184,686 | $ | 1,191,113 | $ | 1,284,456 | $ | (6,427 | ) | $ | (93,343 | ) | ||||||||
Net Premiums Earned | $ | 1,182,026 | $ | 1,177,217 | $ | 1,234,300 | $ | 4,809 | $ | (57,083 | ) | |||||||||
Net Investment Income | 69,348 | 75,041 | 72,759 | (5,693 | ) | 2,282 | ||||||||||||||
Other Income | 8,973 | 8,623 | 7,524 | 350 | 1,099 | |||||||||||||||
Total Revenues | 1,260,347 | 1,260,881 | 1,314,583 | (534 | ) | (53,702 | ) | |||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Policy Benefits | 939,854 | 818,230 | 881,806 | 121,624 | (63,576 | ) | ||||||||||||||
Commissions | 226,100 | 217,043 | 230,616 | 9,057 | (13,573 | ) | ||||||||||||||
Other operating costs and expenses | 132,601 | 110,705 | 109,940 | 21,896 | 765 | |||||||||||||||
Change in deferred policy acquisition costs | (9,669 | ) | (7,639 | ) | (5,454 | ) | (2,030 | ) | (2,185 | ) | ||||||||||
Total Benefits and Expenses | 1,288,886 | 1,138,339 | 1,216,908 | 150,547 | (78,569 | ) | ||||||||||||||
Income/(Loss) from operations before other items and federal income taxes | $ | (28,539 | ) | $ | 122,542 | $ | 97,675 | $ | (151,081 | ) | $ | 24,867 | ||||||||
Loss ratio | 79.5 | % | 69.5 | % | 71.4 | % | 10.0 | % | (1.9 | %) | ||||||||||
Underwriting Expense ratio | 29.5 | % | 27.2 | % | 27.2 | % | 2.3 | % | 0.0 | % | ||||||||||
Combined ratio | 109.0 | % | 96.7 | % | 98.6 | % | 12.3 | % | (1.9 | %) | ||||||||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Commissions | $ | 226,100 | $ | 217,043 | $ | 230,616 | $ | 9,057 | $ | (13,573 | ) | |||||||||
Change in deferred policy acquisition costs | (9,669 | ) | (7,639 | ) | (5,454 | ) | (2,030 | ) | (2,185 | ) | ||||||||||
Commissions and change in deferred acquistion costs | $ | 216,431 | $ | 209,404 | $ | 225,162 | $ | 7,027 | $ | (15,758 | ) | |||||||||
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Auto (Personal | ||||||||||||||||||||||||
and | Home | |||||||||||||||||||||||
Commercial) | Owner | Agribusiness | Credit | Other | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Net premiums written | $ | 557,700 | $ | 203,516 | $ | 101,243 | $ | 148,351 | $ | 173,876 | $ | 1,184,686 | ||||||||||||
Net premiums earned | $ | 565,999 | $ | 205,764 | $ | 105,230 | $ | 135,072 | $ | 169,961 | $ | 1,182,026 | ||||||||||||
Loss ratio | 77.7 | % | 111.0 | % | 92.0 | % | 39.3 | % | 71.5 | % | 79.5 | % | ||||||||||||
Underwriting expense ratio | 23.5 | % | 27.0 | % | 30.4 | % | 64.9 | % | 24.0 | % | 29.5 | % | ||||||||||||
Combined ratio | 101.2 | % | 138.0 | % | 122.4 | % | 104.2 | % | 95.5 | % | 109.0 | % | ||||||||||||
December 31, 2007 | ||||||||||||||||||||||||
Net premiums written | $ | 584,707 | $ | 207,093 | $ | 93,664 | $ | 130,916 | $ | 174,733 | $ | 1,191,113 | ||||||||||||
Net premiums earned | $ | 575,954 | $ | 199,126 | $ | 95,402 | $ | 137,443 | $ | 169,292 | $ | 1,177,217 | ||||||||||||
Loss ratio | 75.9 | % | 68.4 | % | 71.9 | % | 47.9 | % | 65.2 | % | 69.5 | % | ||||||||||||
Underwriting expense ratio | 21.8 | % | 25.8 | % | 33.2 | % | 54.4 | % | 21.8 | % | 27.2 | % | ||||||||||||
Combined ratio | 97.7 | % | 94.2 | % | 105.1 | % | 102.3 | % | 87.0 | % | 96.7 | % | ||||||||||||
December 31, 2006 | ||||||||||||||||||||||||
Net premiums written | $ | 606,994 | $ | 214,271 | $ | 86,698 | $ | 193,841 | $ | 182,652 | $ | 1,284,456 | ||||||||||||
Net premiums earned | $ | 610,083 | $ | 215,347 | $ | 86,280 | $ | 153,663 | $ | 168,927 | $ | 1,234,300 | ||||||||||||
Loss ratio | 75.2 | % | 78.5 | % | 69.8 | % | 49.9 | % | 69.3 | % | 71.4 | % | ||||||||||||
Underwriting expense ratio | 21.7 | % | 25.0 | % | 33.3 | % | 55.6 | % | 20.5 | % | 27.2 | % | ||||||||||||
Combined ratio | 96.9 | % | 103.5 | % | 103.1 | % | 105.5 | % | 89.8 | % | 98.6 | % | ||||||||||||
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• | Treaty reinsurance, in which certain types of policies are automatically reinsured without the need for approval by the reinsurer of the individual risks; | ||
• | Facultative reinsurance, in which individual insurance policy or a specific risk is reinsured with the prior approval of the reinsurer. Facultative reinsurance is purchased for risks which fall outside the treaty reinsurance; and | ||
• | Excess of loss treaty reinsurance, where the reinsurer indemnifies us against all, or a specified portion, of losses and loss adjustment expense incurred in excess of a specified retention or attachment point, and up to the contract limit. |
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• | 90.0% of losses in excess of $40.0 million up to $80.0 million; and | ||
• | 97.5% of losses in excess of $80.0 million up to $500.0 million. |
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Percent of risk covered | ||||||||||||
Non | Catastrophe | |||||||||||
Reinsurer | AM Best Rating | Catastrophe | Coverage | |||||||||
Lloyd’s Syndicates | A | 17.5 | % | 45.0 | % | |||||||
Hannover Re | A | 38.5 | % | 1.4 | % | |||||||
Munich Re America | A | + | 17.7 | % | 1.8 | % | ||||||
Platinum Re | A | 12.1 | % | 2.2 | % | |||||||
Catlin Insurance Co | A | 4.1 | % | 3.8 | % | |||||||
Transatlantic | A | 3.4 | % | 0.5 | % | |||||||
QBE Reinsurance | A | 2.4 | % | 0.4 | % | |||||||
Swiss Re America | A | + | 2.2 | % | 2.1 | % | ||||||
Amlin Bermuda Ltd | A | 2.1 | % | 2.8 | % | |||||||
Tokio Millenium Re Ltd | A | + | — | 5.1 | % | |||||||
Flagstone Reassurance Suisse SA | A | - | — | 3.5 | % | |||||||
Validus | A | - | — | 3.5 | % | |||||||
Munchener Ruckversicherungs-Gesellschaft | A | + | — | 2.9 | % | |||||||
Allianz Suisse Insurance Co | A | + | — | 2.1 | % | |||||||
Other reinsurers with no single company greater than 2% of the total | — | 22.9 | % | |||||||||
Total reinsurance coverage | 100.0 | % | 100.0 | % | ||||||||
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Property and Casualty Loss and Loss Adjustment Expense Liability Development-Net of Reinsurance
For the Years Ended December 31,
1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||||||
Liability for unpaid losses and loss adjustment expenses, net of reinsurance | ||||||||||||||||||||||||||||||||||||||||||||
(includes loss reserves, IBNR, allocated and unalloc expense) | 304,537 | 331,431 | 384,191 | 425,129 | 490,215 | 590,365 | 678,379 | 796,267 | 801,953 | 809,500 | 847,860 | |||||||||||||||||||||||||||||||||
Cumulative paid losses and loss expenses | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 149,108 | 161,942 | 192,167 | 228,699 | 233,074 | 256,386 | 274,810 | 366,007 | 296,620 | 318,944 | ||||||||||||||||||||||||||||||||||
Two years later | 219,048 | 236,136 | 280,667 | 322,112 | 338,459 | 377,139 | 405,748 | 506,463 | 453,042 | |||||||||||||||||||||||||||||||||||
Three years later | 258,018 | 280,004 | 323,685 | 370,179 | 399,651 | 445,702 | 479,410 | 590,643 | ||||||||||||||||||||||||||||||||||||
Four years later | 280,833 | 297,942 | 345,507 | 396,758 | 429,408 | 479,524 | 518,972 | |||||||||||||||||||||||||||||||||||||
Five years later | 286,524 | 306,853 | 356,119 | 407,212 | 443,161 | 498,349 | ||||||||||||||||||||||||||||||||||||||
Six years later | 291,170 | 311,746 | 362,307 | 412,004 | 452,256 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 293,325 | 314,097 | 365,331 | 416,207 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 294,986 | 315,750 | 367,326 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 296,336 | 317,270 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 297,573 | |||||||||||||||||||||||||||||||||||||||||||
Liabilites re-estimated | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 295,202 | 330,858 | 368,951 | 432,028 | 488,595 | 564,287 | 638,910 | 770,238 | 711,880 | 766,882 | ||||||||||||||||||||||||||||||||||
Two years later | 304,657 | 323,422 | 372,991 | 435,574 | 488,455 | 564,485 | 617,374 | 737,341 | 713,339 | |||||||||||||||||||||||||||||||||||
Three years later | 302,758 | 324,838 | 376,776 | 441,564 | 490,717 | 553,163 | 596,242 | 739,825 | ||||||||||||||||||||||||||||||||||||
Four years later | 304,336 | 323,853 | 379,498 | 441,309 | 482,799 | 538,459 | 596,754 | |||||||||||||||||||||||||||||||||||||
Five years later | 303,922 | 324,878 | 379,318 | 435,796 | 476,615 | 542,429 | ||||||||||||||||||||||||||||||||||||||
Six years later | 304,411 | 326,786 | 380,050 | 432,953 | 478,201 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 306,526 | 326,798 | 379,270 | 433,990 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 306,503 | 326,345 | 380,082 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 306,308 | 327,685 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 307,507 | |||||||||||||||||||||||||||||||||||||||||||
Cumulative Deficiency(redundancy), net of reinsurance | 2,970 | (3,746 | ) | (4,109 | ) | 8,861 | (12,014 | ) | (47,936 | ) | (81,625 | ) | (56,442 | ) | (88,614 | ) | (42,618 | ) | ||||||||||||||||||||||||||
For the Years Ended December 31,
1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||||||
Net reserve, as initially estimated | 304,537 | 331,431 | 384,191 | 425,129 | 490,215 | 590,365 | 678,379 | 796,267 | 801,953 | 809,500 | 847,860 | |||||||||||||||||||||||||||||||||
Reinsurance and other recoverables as initially estimated | 35,787 | 35,677 | 47,162 | 65,327 | 61,077 | 61,600 | 76,149 | 75,857 | 75,529 | 68,559 | 76,722 | |||||||||||||||||||||||||||||||||
Gross reserve as initially estimated | 340,235 | 366,943 | 431,075 | 490,103 | 550,022 | 646,397 | 746,077 | 859,452 | 864,067 | 865,451 | 913,013 | |||||||||||||||||||||||||||||||||
Net re-estimated reserve | 307,507 | 327,685 | 380,082 | 433,990 | 478,201 | 542,429 | 596,754 | 739,825 | 713,339 | 766,882 | ||||||||||||||||||||||||||||||||||
Re-estimated and other reinsurance recoverables | 63,301 | 67,633 | 85,344 | 81,430 | 82,381 | 83,855 | 81,260 | 485,124 | 81,768 | 58,273 | ||||||||||||||||||||||||||||||||||
Gross re-estimated reserve | 370,808 | 395,318 | 465,426 | 515,420 | 560,582 | 626,284 | 678,014 | 1,224,949 | 795,107 | 825,155 | ||||||||||||||||||||||||||||||||||
Deficiency(redundancy), gross of reinsurance | 30,573 | 28,375 | 34,351 | 25,317 | 10,560 | (20,113 | ) | (68,063 | ) | 365,497 | (68,960 | ) | (40,296 | ) | ||||||||||||||||||||||||||||||
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Three Months Ended March 31, | Increase/ | |||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Net premiums written | $ | 296,820 | $ | 307,404 | $ | (10,584 | ) | |||||
Net Premiums Earned | 292,489 | 300,106 | (7,617 | ) | ||||||||
Net Investment Income | 16,818 | 19,144 | (2,326 | ) | ||||||||
Other Income | 2,030 | 2,002 | 28 | |||||||||
Total Revenues | 311,337 | 321,252 | (9,915 | ) | ||||||||
Benefits And Expenses: | ||||||||||||
Policy Benefits | 248,074 | 217,611 | 30,463 | |||||||||
Commissions | 51,986 | 57,068 | (5,082 | ) | ||||||||
Other operating costs and expenses | 27,764 | 28,512 | (748 | ) | ||||||||
Change in deferred policy acquisition costs | 3,052 | (4,632 | ) | 7,684 | ||||||||
Total Benefits and Expenses | 330,876 | 298,559 | 32,317 | |||||||||
Income/(Loss) from operations before other items and federal income taxes | $ | (19,539 | ) | $ | 22,693 | $ | (42,232 | ) | ||||
Loss ratio | 84.8 | % | 72.5 | % | 12.3 | % | ||||||
Underwriting expense ratio | 28.3 | 27.0 | 1.3 | |||||||||
Combined ratio | 113.1 | % | 99.5 | % | 13.6 | % | ||||||
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Three Months Ended March 31, | ||||||||||||
2009 | 2008 | Increase/ (Decrease) | ||||||||||
(in thousands) | ||||||||||||
Commissions | $ | 51,986 | $ | 57,068 | $ | (5,082 | ) | |||||
Change in deferred policy acquisition costs | 3,052 | (4,632 | ) | 7,684 | ||||||||
Commissions and change in deferred acquistion costs | $ | 55,038 | $ | 52,436 | $ | 2,602 | ||||||
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Auto (Personal | ||||||||||||||||||||||||
and | Home | Credit | ||||||||||||||||||||||
Commercial) | Owner | Agribusiness | Related | Other | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
March 31, 2009 | ||||||||||||||||||||||||
Net premiums written | $ | 143,488 | $ | 46,102 | $ | 24,736 | $ | 36,027 | $ | 46,467 | $ | 296,820 | ||||||||||||
Net premiums earned | $ | 136,928 | $ | 51,951 | $ | 26,270 | $ | 36,442 | $ | 40,898 | $ | 292,489 | ||||||||||||
Loss ratio | 82.4 | % | 117.5 | % | 102.7 | % | 38.9 | % | 81.0 | % | 84.8 | % | ||||||||||||
Underwriting expense ratio | 20.4 | 23.6 | 35.7 | 60.7 | 27.1 | 28.3 | ||||||||||||||||||
Combined ratio | 102.8 | % | 141.1 | % | 138.4 | % | 99.6 | % | 108.1 | % | 113.1 | % | ||||||||||||
March 31, 2008 | ||||||||||||||||||||||||
Net premiums written | $ | 150,441 | $ | 46,365 | $ | 24,488 | $ | 37,646 | $ | 48,464 | $ | 307,404 | ||||||||||||
Net premiums earned | $ | 143,552 | $ | 54,319 | $ | 25,672 | $ | 34,747 | $ | 41,816 | $ | 300,106 | ||||||||||||
Loss ratio | 74.0 | % | 79.4 | % | 108.8 | % | 37.5 | % | 68.7 | % | 72.5 | % | ||||||||||||
Underwriting expense ratio | 20.6 | 21.1 | 29.7 | 64.9 | 23.4 | 27.0 | ||||||||||||||||||
Combined ratio | 94.6 | % | 100.5 | % | 138.5 | % | 102.4 | % | 92.1 | % | 99.5 | % | ||||||||||||
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Year Ended December 31, | Increase/(Decrease) | |||||||||||||||||||
2008 | 2007 | 2006 | 2008 vs. 2007 | 2007 vs. 2006 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Net investment income | $ | 109,597 | $ | 127,519 | $ | 159,723 | $ | (17,922 | ) | $ | (32,204 | ) | ||||||||
Gain/(Loss) from sale of investments, net | (379,709 | ) | 41,027 | 100,256 | (420,736 | ) | (59,229 | ) | ||||||||||||
Other income | 18,505 | 21,241 | 22,397 | (2,736 | ) | (1,156 | ) | |||||||||||||
Total Revenues | (251,607 | ) | 189,787 | 282,376 | (441,394 | ) | (92,589 | ) | ||||||||||||
Benefits And Expenses: | ||||||||||||||||||||
Other operating costs and expenses | 37,839 | 61,069 | 65,407 | (23,230 | ) | (4,338 | ) | |||||||||||||
Total Benefits and Expenses | 37,839 | 61,069 | 65,407 | (23,230 | ) | (4,338 | ) | |||||||||||||
Income (loss) before other items and federal income taxes | $ | (289,446 | ) | $ | 128,718 | $ | 216,969 | $ | (418,164 | ) | $ | (88,251 | ) | |||||||
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Three Months Ended March 31, | Increase/(Decrease) | |||||||||||
2009 | 2008 | 2009 vs. 2008 | ||||||||||
(in thousands) | ||||||||||||
Revenue: | ||||||||||||
Net investment income | $ | 17,232 | $ | 24,353 | $ | (7,121 | ) | |||||
(Loss) from sale of investments, net | (73,461 | ) | (5,585 | ) | (67,876 | ) | ||||||
Other income | 3,770 | 5,529 | (1,759 | ) | ||||||||
Total Revenues | (52,459 | ) | 24,297 | (76,756 | ) | |||||||
Benefits And Expenses: | ||||||||||||
Other operating costs and expenses | 6,831 | 11,770 | (4,939 | ) | ||||||||
Total Benefits and Expenses | 6,831 | 11,770 | (4,939 | ) | ||||||||
Income (loss) before other items and federal income taxes | $ | (59,290 | ) | $ | 12,527 | $ | (71,817 | ) | ||||
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Year Ended December 31, | Three Months Ended March 31, | |||||||||||||||||||
2008 | 2007 | 2006 | 2009 | 2008 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | $ | 171,681 | $ | 462,913 | $ | 503,493 | $ | 150,819 | $ | 182,937 | ||||||||||
Investing activities | (690,441 | ) | (436,670 | ) | (148,836 | ) | (535,096 | ) | (555,103 | ) | ||||||||||
Financing activities | 450,787 | (107,051 | ) | (199,207 | ) | 437,959 | 364,183 | |||||||||||||
Net increase in cash | $ | (67,973 | ) | $ | (80,808 | ) | $ | 155,450 | $ | 53,682 | $ | (7,983 | ) | |||||||
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As of December 31, | As of March 31, | |||||||||||||||
2008 | 2007 | 2006 | 2009 | |||||||||||||
(in thousands) | ||||||||||||||||
Equity, excluding accumulated other comprehensive income (loss), net of tax (“AOCI”) | $ | 3,355,004 | $ | 3,590,812 | $ | 3,433,754 | $ | 3,295,725 | ||||||||
AOCI, net of tax | (221,148 | ) | 145,972 | 141,869 | (236,211 | ) | ||||||||||
Total stockholders’ equity | $ | 3,133,856 | $ | 3,736,784 | $ | 3,575,623 | $ | 3,059,514 | ||||||||
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Payments due by Period | ||||||||||||||||||||
Less than 1 | More than 5 | |||||||||||||||||||
Total | year | 1-3 years | 4-5 years | years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Life insurance obligations (1) | $ | 6,543,414 | $ | 14,029 | $ | 42,690 | $ | 262,212 | $ | 6,224,483 | ||||||||||
Annuity obligations (1) | 9,499,020 | 1,232,677 | 3,271,554 | 2,202,539 | 2,792,250 | |||||||||||||||
Property & Casualty insurance obligations (2) | 993,561 | 442,315 | 363,981 | 113,436 | 73,829 | |||||||||||||||
Accident & Health insurance obligations (3) | 152,306 | 94,353 | 20,376 | 9,667 | 27,910 | |||||||||||||||
Purchase obligations: | ||||||||||||||||||||
Commitments to purchase and fund investments (4) | 50,917 | 39,548 | 2,821 | — | 8,548 | |||||||||||||||
Mortgage loan commitments (5) | 152,793 | 142,915 | 9,878 | — | — | |||||||||||||||
Operating leases (6) | 3,844 | 1,495 | 1,892 | 446 | 11 | |||||||||||||||
Defined benefit pension plans (7) | 157,347 | 7,635 | 19,599 | 17,494 | 112,619 | |||||||||||||||
Net unrecognized tax benefits (8) | 1,000 | 1,000 | — | — | — | |||||||||||||||
Total | $ | 17,554,202 | $ | 1,975,967 | $ | 3,732,791 | $ | 2,605,794 | $ | 9,239,650 | ||||||||||
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(1) | Life and annuity obligations include estimated claim, benefit, surrender and commission obligations offset by expected future premiums and deposits on in-force insurance policies and contracts. All amounts are gross of reinsurance. Estimated claim, benefit and surrender obligations are based on mortality and lapse assumptions that are comparable with historical experience. Estimated payments on interest-sensitive life and annuity obligations include interest credited to those products. The interest crediting rates are derived by deducting current product spreads from a constant investment yield. The obligations shown in the table have not been discounted at present value. As a result, the estimated obligations for insurance liabilities included in the table exceed the liabilities recorded in reserves for future policy benefits and the liability for policy and contract claims. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results. Separate account obligations have not been included since those obligations are not part of the general account obligations and will be funded by cash flows from separate account assets. The general account obligations for insurance liabilities will be funded by cash flows from general account assets and future premiums and deposits. Participating policyholder dividends payable consists of liabilities related to dividends payable in the following calendar year on participating policies. As such, the contractual obligation related to participating policyholder dividends payable is presented in the table above in the less than one year category at the amount of the liability presented in the consolidated balance sheet. All estimated cash payments represented in the table above are undiscounted as to interest, net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. Estimated future premiums on participating policies currently in-force are net of future policyholder dividends payable. Future policyholder dividends, the participating policyholder share obligation on the consolidated balance sheet, represents the accumulated net income from participating policies and a pro-rata portion of unrealized investment gains (losses), net of tax, reserved for payment to such policyholders as policyholder dividends. Because of the nature of the participating policyholder obligation, the exact timing and amount of the ultimate participating policyholder obligation is subject to significant uncertainty and the amount of the participating policyholder obligation is based upon a long-term projection of the performance of the participating policy block. | |
(2) | Expected future gross loss and loss adjustment expense payments from property and casualty policies. This includes case reserves for reported claims and reserves for claims IBNR. Timing of future payments is estimated based on the Company’s historical payment patterns. The timing of these payments may vary significantly from the amounts shown above. The ultimate losses may vary materially from the recorded amounts which are our best estimates. | |
(3) | Accident and health insurance obligations reflect estimated future claim payment amounts net of reinsurance for claims incurred prior to 1/1/2009. The estimate does not include claim payments for claims incurred after 12/31/2008. Estimated claim payment amounts are based on mortality and morbidity assumptions that are consistent with historical experience and are not discounted with interest so will exceed the liabilities recorded in reserves for future claim payments. Due to the significance of the assumptions used, actual results could vary greatly from the estimates shown here. | |
(4) | Expected payments to fund investments based on capital commitments and other related contractual obligations. | |
(5) | Expected future payments to fund investments based on mortgage loan commitments and other related contractual obligations. | |
(6) | Represents estimated obligations due to contracts and agreements entered into within the ordinary course of business for items classified by SFAS 13 as Operating Leases. The Company rents office space which qualifies as operating leases under SFAS 13. | |
(7) | Represents estimated payments for pension benefit obligations for the non-qualified defined benefit pension plan. As such, these payments are funded through continuing operations. A liability has been established for the full amount of benefits accrued as per SFAS 158, including a provision for the effects of future salary inflation on the accrued benefits. | |
(8) | Net unrecognized tax benefits relates to FIN 48. We believe it is reasonably possible that the FIN 48 liability balance will be settled for approximately $1.0 million within the next 12 months with the resolution of an outstanding issue resulting from the Internal Revenue Service examination of the 1999 through 2003 tax years. |
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• | G. Richard Ferdinandtsen, President and Chief Operating Officer; | ||
• | William L. Moody, IV, a member of our Board of Directors since 1951; | ||
• | Michael W. McCroskey, Executive Vice President, Investments & Treasurer; | ||
• | Gordon D. Dixon, Senior Vice President, Securities Investments; | ||
• | Scott F. Brast, Senior Vice President, Real Estate/Mortgage Loan Investments; | ||
• | Frank V. Broll, Jr., Senior Vice President and Actuary; | ||
• | Anne M. LeMire, Vice President, Fixed Income; | ||
• | Robert J. Kirchner, Vice President, Real Estate Investments; and | ||
• | E. Vince Matthews, III, Vice President, Mortgage Loan Production. |
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As of: | ||||||||||||||||||||||||
December 31, 2008 | December 31, 2007 | March 31, 2009 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Bonds Held to Maturity, at amortized cost | $ | 6,681,837 | 45.9 | % | $ | 6,692,447 | 44.7 | % | $ | 6,785,080 | 45.1 | % | ||||||||||||
Bonds Available for Sale, at fair value | 3,820,837 | 26.3 | 3,837,988 | 25.7 | 3,864,058 | 25.7 | ||||||||||||||||||
Preferred Stock, at fair value | 48,822 | 0.3 | 78,885 | 0.5 | 49,580 | 0.3 | ||||||||||||||||||
Common Stock, at fair value | 853,530 | 5.9 | 1,194,982 | 8.0 | 740,936 | 4.9 | ||||||||||||||||||
Mortgage Loans, at amortized cost | 1,877,053 | 13.0 | 1,540,081 | 10.3 | 1,909,598 | 12.7 | ||||||||||||||||||
Policy Loans, at outstanding balance | 354,398 | 2.4 | 346,002 | 2.3 | 355,010 | 2.4 | ||||||||||||||||||
Investment Real Estate, net of depreciation | 528,905 | 3.6 | 477,458 | 3.2 | 542,799 | 3.6 | ||||||||||||||||||
Short-term Investments | 295,170 | 2.0 | 698,262 | 4.7 | 710,895 | 4.7 | ||||||||||||||||||
Other Invested Assets | 85,151 | 0.6 | 89,791 | 0.6 | 82,119 | 0.6 | ||||||||||||||||||
Total Investments | $ | 14,545,703 | 100.0 | % | $ | 14,955,896 | 100.0 | % | $ | 15,040,075 | 100.0 | % | ||||||||||||
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Three Months | ||||||||||||||||
Year Ended December 31, | Ended March 31, | |||||||||||||||
2008 | 2007 | 2006 | 2009 | |||||||||||||
(in thousands) | ||||||||||||||||
Corporate bonds | $ | (165,802 | ) | $ | (1,089 | ) | $ | (6,967 | ) | $ | (5,898 | ) | ||||
Equities: | ||||||||||||||||
Financial Services | (125,518 | ) | — | — | (19,810 | ) | ||||||||||
Other | (74,231 | ) | (6,077 | ) | (1,700 | ) | (41,866 | ) | ||||||||
Mortgage loans | (740 | ) | — | — | — | |||||||||||
Real Estate | (745 | ) | — | — | (500 | ) | ||||||||||
Total other-than-temporary impairment charges | $ | (367,036 | ) | $ | (7,166 | ) | $ | (8,667 | ) | $ | (68,074 | ) | ||||
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December 31, 2008 | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | % of Fair | |||||||||||||||||
Cost | Gains | Losses | Fair Value | Value | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Corporate bonds | $ | 8,197,057 | $ | 71,968 | $ | (943,424 | ) | $ | 7,325,601 | 73.5 | % | |||||||||
Mortgage-backed securities | 1,205,379 | 17,974 | (82,118 | ) | 1,141,235 | 11.5 | ||||||||||||||
States and political subdivisions | 742,175 | 10,940 | (19,922 | ) | 733,193 | 7.4 | ||||||||||||||
Public utilities | 587,265 | 8,440 | (35,668 | ) | 560,037 | 5.5 | ||||||||||||||
US Treasury and government agencies | 174,037 | 3,355 | (3 | ) | 177,389 | 1.8 | ||||||||||||||
Foreign governments | 5,254 | 1,618 | (87 | ) | 6,785 | 0.1 | ||||||||||||||
Other | 30,230 | 2 | (4,932 | ) | 25,300 | 0.2 | ||||||||||||||
Total fixed income | $ | 10,941,397 | $ | 114,297 | $ | (1,086,154 | ) | $ | 9,969,540 | 100.0 | % | |||||||||
December 31, 2007 | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | % of Fair | |||||||||||||||||
Cost | Gains | Losses | Fair Value | Value | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Corporate bonds | $ | 7,907,068 | $ | 124,974 | $ | (180,500 | ) | $ | 7,851,542 | 74.6 | % | |||||||||
Mortgage-backed securities | 1,163,340 | 7,508 | (22,363 | ) | 1,148,485 | 10.9 | ||||||||||||||
States and political subdivisions | 644,547 | 7,882 | (981 | ) | 651,448 | 6.2 | ||||||||||||||
Public utilities | 603,686 | 14,699 | (6,061 | ) | 612,324 | 5.8 | ||||||||||||||
US Treasury and government agencies | 250,420 | 1,945 | (312 | ) | 252,053 | 2.4 | ||||||||||||||
Foreign governments | 6,668 | 664 | (23 | ) | 7,309 | 0.1 | ||||||||||||||
Total fixed income | $ | 10,575,729 | $ | 157,672 | $ | (210,240 | ) | $ | 10,523,161 | 100.0 | % | |||||||||
As of March 31, 2009 | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | % of Fair | |||||||||||||||||
Cost | Gains | Losses | Fair Value | Value | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Corporate bonds | $ | 8,403,910 | $ | 88,502 | $ | (926,463 | ) | $ | 7,565,949 | 74.6 | % | |||||||||
Mortgage-backed securities | 1,178,210 | 30,578 | (74,985 | ) | 1,133,803 | 11.2 | ||||||||||||||
States and political subdivisions | 725,566 | 16,927 | (8,641 | ) | 733,852 | 7.2 | ||||||||||||||
Public utilities | 595,650 | 9,831 | (21,331 | ) | 584,150 | 5.8 | ||||||||||||||
US Treasury and government agencies | 103,841 | 3,300 | (8 | ) | 107,133 | 1.1 | ||||||||||||||
Foreign governments | 5,527 | 1,230 | (66 | ) | 6,691 | 0.1 | ||||||||||||||
Total fixed income | $ | 11,012,704 | $ | 150,368 | $ | (1,031,494 | ) | $ | 10,131,578 | 100.00 | % | |||||||||
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As of December 31, 2008 | ||||||||||||||||
Amortized Cost | Percent | Estimated Fair Value | Percent | |||||||||||||
(in thousands) | ||||||||||||||||
Bonds Held To Maturity | ||||||||||||||||
Due in one year or less | $ | 335,885 | 5.0 | % | $ | 334,044 | 5.4 | % | ||||||||
Due after one year through five years | 2,880,344 | 43.1 | 2,674,238 | 43.5 | ||||||||||||
Due after five years through ten years | 2,722,138 | 40.7 | 2,436,099 | 39.6 | ||||||||||||
Due after ten years | 737,619 | 11.1 | 700,052 | 11.4 | ||||||||||||
Without single maturity date | 5,851 | 0.1 | 4,270 | 0.1 | ||||||||||||
Total Bonds Held To Maturity | $ | 6,681,837 | 100.0 | % | $ | 6,148,703 | 100.0 | % | ||||||||
Bonds Available For Sale | ||||||||||||||||
Due in one year or less | $ | 154,877 | 3.6 | % | $ | 153,727 | 4.0 | % | ||||||||
Due after one year through five years | 1,359,792 | 31.9 | 1,237,037 | 32.4 | ||||||||||||
Due after five years through ten years | 2,012,462 | 47.2 | 1,733,270 | 45.3 | ||||||||||||
Due after ten years | 722,153 | 17.0 | 689,786 | 18.1 | ||||||||||||
Without single maturity date | 10,276 | 0.3 | 7,017 | 0.2 | ||||||||||||
Total Bonds Available For Sale | $ | 4,259,560 | 100.0 | % | $ | 3,820,837 | 100.0 | % | ||||||||
Total | $ | 10,941,397 | $ | 9,969,540 | ||||||||||||
December 31, 2007 | ||||||||||||||||
Amortized Cost | Percent | Estimated Fair Value | Percent | |||||||||||||
(in thousands) | ||||||||||||||||
Bonds Held To Maturity | ||||||||||||||||
Due in one year or less | $ | 319,141 | 4.8 | % | $ | 320,415 | 4.8 | % | ||||||||
Due after one year through five years | 1,892,993 | 28.3 | 1,929,781 | 28.8 | ||||||||||||
Due after five years through ten years | 3,295,874 | 49.2 | 3,261,365 | 48.8 | ||||||||||||
Due after ten years | 1,178,588 | 17.6 | 1,168,268 | 17.5 | ||||||||||||
Without single maturity date | 5,851 | 0.1 | 5,345 | 0.1 | ||||||||||||
Total Bonds Held To Maturity | $ | 6,692,447 | 100.0 | % | $ | 6,685,174 | 100.0 | % | ||||||||
Bonds Available For Sale | ||||||||||||||||
Due in one year or less | $ | 110,830 | 2.9 | % | $ | 114,900 | 3.0 | % | ||||||||
Due after one year through five years | 1,018,829 | 26.2 | 1,016,771 | 26.5 | ||||||||||||
Due after five years through ten years | 2,143,337 | 55.2 | 2,096,740 | 54.6 | ||||||||||||
Due after ten years | 605,010 | 15.6 | 604,463 | 15.8 | ||||||||||||
Without single maturity date | 5,276 | 0.1 | 5,113 | 0.1 | ||||||||||||
Total Bonds Available For Sale | $ | 3,883,282 | 100.0 | % | $ | 3,837,987 | 100.0 | % | ||||||||
Total | $ | 10,575,729 | $ | 10,523,161 | ||||||||||||
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As of March 31, 2009 | ||||||||||||||||
Amortized Cost | Percent | Estimated Fair Value | Percent | |||||||||||||
(in thousands) | ||||||||||||||||
Bonds Held To Maturity | ||||||||||||||||
Due in one year or less | $ | 212,109 | 3.1 | % | $ | 212,629 | 3.4 | % | ||||||||
Due after one year through five years | 3,106,939 | 45.8 | 2,904,250 | 46.3 | ||||||||||||
Due after five years through ten years | 2,715,269 | 40.0 | 2,430,406 | 38.8 | ||||||||||||
Due after ten years | 744,913 | 11.0 | 717,785 | 11.4 | ||||||||||||
Without single maturity date | 5,850 | 0.1 | 2,450 | 0.1 | ||||||||||||
Total Bonds Held To Maturity | $ | 6,785,080 | 100.0 | % | $ | 6,267,520 | 100.0 | % | ||||||||
Bonds Available For Sale | ||||||||||||||||
Due in one year or less | $ | 136,132 | 3.2 | % | $ | 135,980 | 3.5 | % | ||||||||
Due after one year through five years | 1,562,027 | 37.0 | 1,427,855 | 37.0 | ||||||||||||
Due after five years through ten years | 1,833,823 | 43.4 | 1,623,542 | 42.0 | ||||||||||||
Due after ten years | 685,366 | 16.2 | 671,136 | 17.4 | ||||||||||||
Without single maturity date | 10,276 | 0.2 | 5,545 | 0.1 | ||||||||||||
Total Bonds Available For Sale | $ | 4,227,624 | 100.0 | % | $ | 3,864,058 | 100.0 | % | ||||||||
Total | $ | 11,012,704 | $ | 10,131,578 | ||||||||||||
As of December 31, 2008 | As of December 31, 2007 | As of March 31, 2009 | ||||||||||||||||||||||||||||||||||
% of Fair | % of Fair | % of Fair | ||||||||||||||||||||||||||||||||||
Amortized Cost | Fair Value | Value | Amortized Cost | Fair Value | Value | Amortized Cost | Fair Value | Value | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
AAA | $ | 1,671,644 | $ | 1,644,482 | 16.5 | % | $ | 2,077,984 | $ | 2,066,478 | 19.6 | % | $ | 1,479,606 | $ | 1,485,517 | 14.7 | % | ||||||||||||||||||
AA | 1,044,896 | 984,250 | 9.9 | 1,103,379 | 1,107,575 | 10.5 | 1,068,738 | 1,011,619 | 10.0 | |||||||||||||||||||||||||||
A | 4,278,795 | 3,983,117 | 40.0 | 3,829,658 | 3,824,449 | 36.4 | 3,923,353 | 3,687,806 | 36.4 | |||||||||||||||||||||||||||
BBB | 3,266,507 | 2,801,027 | 28.1 | 3,028,852 | 2,997,080 | 28.5 | 3,740,871 | 3,266,976 | 32.2 | |||||||||||||||||||||||||||
BB | 282,298 | 222,591 | 2.2 | 235,289 | 234,436 | 2.2 | 340,663 | 273,014 | 2.7 | |||||||||||||||||||||||||||
Below BB | 397,257 | 334,073 | 3.3 | 300,567 | 293,143 | 2.8 | 459,473 | 406,646 | 4.0 | |||||||||||||||||||||||||||
Total | $ | 10,941,397 | $ | 9,969,540 | 100.0 | % | $ | 10,575,729 | $ | 10,523,161 | 100.0 | % | $ | 11,012,704 | $ | 10,131,578 | 100.0 | % | ||||||||||||||||||
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December 31, 2008 | ||||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Common Stock | $ | 820,908 | $ | 115,692 | $ | (83,070 | ) | $ | 853,530 | |||||||
Peferred Stock | 60,718 | 3,609 | (15,505 | ) | 48,822 | |||||||||||
Total | $ | 881,626 | $ | 119,301 | $ | (98,575 | ) | $ | 902,352 | |||||||
December 31, 2007 | ||||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Common Stock | $ | 866,371 | $ | 375,402 | $ | (46,791 | ) | $ | 1,194,982 | |||||||
Peferred Stock | 87,422 | 1,742 | (10,279 | ) | 78,885 | |||||||||||
Total | $ | 953,793 | $ | 377,144 | $ | (57,070 | ) | $ | 1,273,867 | |||||||
March 31, 2009 | ||||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Common Stock | $ | 739,818 | $ | 82,236 | $ | (81,118 | ) | $ | 740,936 | |||||||
Peferred Stock | 60,359 | 1,321 | (12,100 | ) | 49,580 | |||||||||||
Total | $ | 800,177 | $ | 83,557 | $ | (93,218 | ) | $ | 790,516 | |||||||
December 31, | December 31, | March 31, | ||||||||||
2008 | 2007 | 2009 | ||||||||||
(in percent) | ||||||||||||
Equity Securities | ||||||||||||
Consumer Goods | 20 | % | 19 | % | 21 | % | ||||||
Energy & Utilities | 13 | 13 | 14 | |||||||||
Financials | 16 | 24 | 13 | |||||||||
Health Care | 13 | 11 | 12 | |||||||||
Industrials | 8 | 8 | 8 | |||||||||
Information Technology | 13 | 13 | 15 | |||||||||
Materials | 2 | 3 | 2 | |||||||||
Communication | 5 | 3 | 4 | |||||||||
Mutual Funds | 10 | 6 | 11 | |||||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
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December 31, | December 31, | March 31, | ||||||||||
2008 | 2007 | 2009 | ||||||||||
(in percent) | ||||||||||||
Industrial | 25 | % | 24 | % | 26 | % | ||||||
Office buildings | 30 | 25 | 29 | |||||||||
Shopping centers | 21 | 24 | 21 | |||||||||
Hotels and motels | 17 | 15 | 17 | |||||||||
Commercial | 3 | 9 | 3 | |||||||||
Other | 4 | 3 | 4 | |||||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
December 31, | December 31, | March 31, | ||||||||||
2008 | 2007 | 2009 | ||||||||||
(in percent) | ||||||||||||
West South Central | 22 | % | 23 | % | 23 | % | ||||||
South Atlantic | 17 | 16 | 17 | |||||||||
Pacific | 13 | 16 | 12 | |||||||||
East North Central | 22 | 15 | 22 | |||||||||
Middle Atlantic | 10 | 11 | 10 | |||||||||
East South Central | 4 | 4 | 4 | |||||||||
New England | 5 | 7 | 4 | |||||||||
Mountain | 5 | 5 | 5 | |||||||||
West North Central | 2 | 3 | 3 | |||||||||
Total Properties | 100 | % | 100 | % | 100 | % | ||||||
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December 31, | March 31, | |||||||||||
2008 | 2007 | 2009 | ||||||||||
(in percent) | ||||||||||||
Industrial | 45 | % | 43 | % | 44 | % | ||||||
Office buildings | 18 | 20 | 17 | |||||||||
Shopping centers | 23 | 23 | 23 | |||||||||
Hotels and motels | 2 | 2 | 2 | |||||||||
Commercial | 1 | 1 | 2 | |||||||||
Other | 11 | 11 | 12 | |||||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
December 31, | March 31, | |||||||||||
2008 | 2007 | 2009 | ||||||||||
(in percent) | ||||||||||||
West South Central | 64 | % | 60 | % | 64 | % | ||||||
South Atlantic | 16 | 17 | 15 | |||||||||
Pacific | 2 | 3 | 3 | |||||||||
East North Central | 6 | 6 | 7 | |||||||||
East South Central | 10 | 11 | 10 | |||||||||
Mountain | 1 | 1 | — | |||||||||
West North Central | 1 | 2 | 1 | |||||||||
Total Properties | 100 | % | 100 | % | 100 | % | ||||||
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Investment Income | Gains (Losses) on Investments | |||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Bonds | $ | 623,356 | $ | 620,035 | $ | 610,268 | $ | (157,272 | ) | $ | 366 | $ | 3,192 | |||||||||||
Preferred stocks | 5,687 | 4,561 | 3,356 | (49,172 | ) | — | (6 | ) | ||||||||||||||||
Common stocks | 28,977 | 27,002 | 28,641 | (164,407 | ) | 23,913 | 62,872 | |||||||||||||||||
Mortgage loans | 118,067 | 103,627 | 104,052 | — | — | — | ||||||||||||||||||
Real estate | 114,198 | 126,926 | 151,099 | 1,005 | 18,563 | 26,888 | ||||||||||||||||||
Other invested assets | 12,123 | 40,994 | 56,386 | (5,977 | ) | (40 | ) | 53 | ||||||||||||||||
902,408 | 923,145 | 953,802 | (375,823 | ) | 42,802 | 92,999 | ||||||||||||||||||
Investment expenses | (106,231 | ) | (110,176 | ) | (117,785 | ) | — | — | — | |||||||||||||||
Decrease (increase) in valuation allowances | — | — | — | (3,886 | ) | (1,775 | ) | 7,257 | ||||||||||||||||
Total | $ | 796,177 | $ | 812,969 | $ | 836,017 | $ | (379,709 | ) | $ | 41,027 | $ | 100,256 | |||||||||||
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Investment Income | Gains/ (Losses) on Investments | |||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(in thousands) | ||||||||||||||||
Bonds | $ | 151,446 | $ | 152,328 | $ | (6,868 | ) | $ | 181 | |||||||
Preferred stocks | 938 | 1,204 | (1,620 | ) | — | |||||||||||
Common stocks | 5,993 | 6,381 | (62,492 | ) | (6,491 | ) | ||||||||||
Mortgage loans | 31,976 | 25,539 | — | — | ||||||||||||
Real estate | 25,359 | 23,783 | (500 | ) | 1,594 | |||||||||||
Other invested assets | 4,374 | 2,900 | 336 | (515 | ) | |||||||||||
218,086 | 212,135 | (71,144 | ) | (5,231 | ) | |||||||||||
Investment expenses | (26,890 | ) | (24,547 | ) | ||||||||||||
Decrease (increase) in valuation allowances | — | — | (2,317 | ) | (354 | ) | ||||||||||
Total | $ | 193,196 | $ | 187,588 | $ | (73,461 | ) | $ | (5,585 | ) | ||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Bonds available-for-sale | $ | (393,429 | ) | $ | (4,443 | ) | $ | (38,062 | ) | |||
Preferred stocks | (3,359 | ) | (9,544 | ) | 150 | |||||||
Common stocks | (295,988 | ) | 11,161 | 70,520 | ||||||||
Amortization of deferred policy acquisition costs | 164,937 | 3,080 | 13,675 | |||||||||
(527,839 | ) | 254 | 46,283 | |||||||||
Provision for federal income taxes | 185,273 | (130 | ) | (16,189 | ) | |||||||
(342,566 | ) | 124 | 30,094 | |||||||||
Change in unrealized gains of investments attributable to participating policyholders’ interest | 10,738 | 144 | (1,159 | ) | ||||||||
Total | $ | (331,828 | ) | $ | 268 | $ | 28,935 | |||||
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
(in thousands) | ||||||||
Bonds available-for-sale | 75,157 | (583 | ) | |||||
Preferred stocks | 1,117 | (6,829 | ) | |||||
Common stocks | (31,504 | ) | (98,756 | ) | ||||
Amortization of deferred policy acquisition costs | (29,635 | ) | 3,878 | |||||
15,135 | (102,290 | ) | ||||||
Provision (benefit) for federal income taxes | 5,297 | (35,802 | ) | |||||
Tax valuation allowance | 25,000 | — | ||||||
(15,162 | ) | (66,488 | ) | |||||
Change in unrealized gains of investments attributable to participating policyholders’ interest | (1,501 | ) | 1,897 | |||||
Total | (16,663 | ) | (64,591 | ) | ||||
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• | Designing an approach to identify potential risks and events that may affect the entity; |
• | Managing risks within our risk profile; and |
• | Providing reasonable assurance regarding the achievement of our strategic objectives. |
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Increase/(decrease) in market value given an interest rate | ||||||||||||||||
increase/(decrease) of X basis points | ||||||||||||||||
(100) | (50) | 50 | 100 | |||||||||||||
As of December 31, 2008 | ||||||||||||||||
Investment portfolio | $ | 391,701 | $ | 198,650 | $ | (203,759 | ) | $ | (406,628 | ) | ||||||
As of December 31, 2007 | ||||||||||||||||
Investment portfolio | $ | 468,095 | $ | 236,083 | $ | (240,750 | ) | $ | (482,021 | ) |
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Year Ended December 31, 2008 | ||||||||||||||||||||
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Total revenues | $ | 724,080 | $ | 731,188 | $ | 522,493 | $ | 540,880 | $ | 2,518,641 | ||||||||||
Total benefits, losses and expenses | 681,137 | 744,873 | 707,635 | 684,748 | 2,818,393 | |||||||||||||||
Income/(loss) before taxes and other items | 42,943 | (13,685 | ) | (185,142 | ) | (143,868 | ) | (299,752 | ) | |||||||||||
Income tax expense/(benefit) | 10,220 | (11,237 | ) | (62,526 | ) | (58,487 | ) | (122,030 | ) | |||||||||||
Minority interest in income/(loss) of consolidated subsidiaries | — | — | — | 31 | 31 | |||||||||||||||
Equity in earnings of unconsolidated affiliates | 7,648 | 613 | (1,795 | ) | (1,501 | ) | 4,965 | |||||||||||||
Income/(loss) from continuing operations | 40,371 | (1,835 | ) | (124,411 | ) | (86,851 | ) | (172,726 | ) | |||||||||||
Income/(loss) from discontinued operations | (1,346 | ) | (1,100 | ) | (622 | ) | 21,796 | 18,728 | ||||||||||||
Net income/(loss) | 39,025 | (2,935 | ) | (125,033 | ) | (65,055 | ) | (153,998 | ) | |||||||||||
Net income/(loss) per share: | ||||||||||||||||||||
Basic | 1.47 | (0.11 | ) | (4.72 | ) | (2.46 | ) | (5.82 | ) | |||||||||||
Diluted | 1.47 | (0.11 | ) | (4.72 | ) | (2.46 | ) | (5.82 | ) |
Year Ended December 31, 2007 | ||||||||||||||||||||
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Total revenues | $ | 745,238 | $ | 819,285 | $ | 766,357 | $ | 725,193 | $ | 3,056,073 | ||||||||||
Total benefits, losses and expenses | 676,323 | 735,917 | 650,476 | 646,111 | 2,708,827 | |||||||||||||||
Income before taxes and other items | 68,915 | 83,368 | 115,881 | 79,082 | 347,246 | |||||||||||||||
Income tax expense | 20,517 | 25,228 | 36,949 | 23,169 | 105,863 | |||||||||||||||
Minority interest in income of consolidated subsidiaries | — | — | — | 482 | 482 | |||||||||||||||
Equity in earnings of unconsolidated affiliates | 2,130 | 2,105 | 1,383 | (1,752 | ) | 3,866 | ||||||||||||||
Income from continuing operations | 50,528 | 60,245 | 80,315 | 54,643 | 245,731 | |||||||||||||||
Income/(loss) from discontinued operations | (1,326 | ) | (1,251 | ) | (1,070 | ) | (1,311 | ) | (4,958 | ) | ||||||||||
Net income | 49,202 | 58,994 | 79,245 | 53,332 | 240,773 | |||||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | 1.86 | 2.23 | 2.99 | 2.01 | 9.09 | |||||||||||||||
Diluted | 1.84 | 2.22 | 2.98 | 2.00 | 9.04 |
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• | We own and occupy three buildings in League City, Texas, consisting of a total of approximately 298,000 square feet. Approximately one-third of such space is leased to third parties. Our use of these facilities is related primarily to our Life, Health, and Corporate and Other segments. |
• | Our Property and Casualty segment conducts substantial operations through the American National Property and Casualty group of companies in Springfield, Missouri, and the Farm Family companies in Glenmont, New York. The Springfield facility is approximately 232,000 square feet, of which we occupy approximately two-thirds, with the remaining portion leased to third parties. The Glenmont facility is approximately 140,000 square feet, all of which is occupied by us. |
• | We own an approximately 100,000 square foot facility in San Antonio, Texas. We occupy approximately one half of this facility. We use this facility as a remote processing center for customer support and to support other business operations in the event the Galveston home office is evacuated due to catastrophic weather. |
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ITEM 4. | SECURITY OWNERSHIP BY DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Amount and Nature | ||||||||
Name and Address of | of Beneficial | Percent of | ||||||
Beneficial Owner | Ownership | Class | ||||||
5% Beneficial Owners: | ||||||||
THE MOODY FOUNDATION(1) 2302 Postoffice Street, Suite 704 Galveston, Texas 77550 | 6,157,822 | 22.96 | ||||||
LIBBIE SHEARN MOODY TRUST(2) c/o Moody National Bank Trust Department 2302 Postoffice Street Galveston, Texas 77550 | 9,949,585 | 37.10 | ||||||
MOODY NATIONAL BANK, TRUSTEE(4) 2302 Postoffice Street Galveston, Texas 77550 | 12,489,057 | (3) | 46.57 |
(1) | The Moody Foundation is a charitable trust classified as a private foundation which was established in 1942 by W. L. Moody, Jr., and his wife, Libbie Shearn Moody, for charitable and educational purposes. The Trustees of The Moody Foundation are Robert L. Moody and Frances Anne Moody-Dahlberg, who are also our directors, and Ross Rankin Moody. Frances Anne Moody-Dahlberg and Ross Rankin Moody are children of Robert L. Moody. | |
(2) | The Libbie Shearn Moody Trust is a split-interest trust with both charitable and non-charitable beneficiaries. Such trust was established in 1943 and funded by a residuary bequest under the Will of Libbie Shearn Moody. Moody National Bank is the Trustee of the Libbie Shearn Moody Trust and, as such, has sole voting power with respect to the 9,949,585 shares of common stock owned by such Trust. | |
(3) | This number includes the 9,949,585 shares owned by the Libbie Shearn Moody Trust, for which Moody National Bank serves as Trustee. In addition to acting as Trustee of and voting the common stock owned by the Libbie Shearn Moody Trust, Moody National Bank also acts as (i) trustee for and votes the 1,155,000 shares of common stock owned by the W.L. Moody, Jr. Trust for Grandchildren (“Trust 19”) and 487,794 shares of common stock owned by other trusts (see “Security Ownership of Management” for additional information); (ii) agent for and votes 780,000 shares of common stock held pursuant to an Agency and Investment Services Agreement for the benefit of The Moody Endowment, a non-profit corporation; and (iii) custodian for and votes 116,678 shares of common stock held pursuant to a Custodial Agreement with Transitional Learning Center at Galveston, a non-profit corporation. Accordingly, Moody National Bank, as trustee, agent or custodian, votes an aggregate of 12,489,057 shares, which constitutes 46.57% of our outstanding shares. Neither Moody National Bank nor the Libbie Shearn Moody Trust has any shared beneficial interest in the shares owned by The Moody Foundation. | |
(4) | Management has been advised that Moody Bank Holding Company, Inc. (“MBHC”), which is wholly-owned by Moody Bancshares, Inc. (“Bancshares”), owns approximately 97.8% of the common stock of Moody National Bank. Management has further been advised that the Three R Trusts, trusts created by Robert L. Moody for the benefit of his children (two of whom, Russell S. Moody and Frances Anne Moody-Dahlberg are our directors) own 100% of Bancshares’ Class B Stock (which elects a majority of Bancshares’ directors) and 51.3% of Bancshares’ Class A Stock. Accordingly, the Three R Trusts, through ownership of Bancshares, controls Moody National Bank. The Trustee of the Three R Trusts is Irwin M. Herz, Jr., one of our advisory directors, and a partner in Greer, Herz & Adams, L.L.P., 18th Floor, One Moody Plaza, Galveston, Texas, General Counsel to us and counsel to Moody National Bank, Bancshares and MBHC. Robert L. Moody is Chairman of the Board, Chief Executive Officer and a director of Moody National Bank, Bancshares and MBHC. |
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Name of | Amount and Nature of | Percent of | ||||||
Beneficial Owner | Beneficial Ownership | Class | ||||||
Arthur O. Dummer | 5,267 | (1) Direct | * | |||||
Dr. Shelby M. Elliott | 4,667 | (2) Direct | * | |||||
G. Richard Ferdinandtsen | 63,000 | (3) Direct | * | |||||
Frances Anne Moody-Dahlberg(4) | 8,000 | (2)Direct | * | |||||
6,157,822 | (5)Indirect | 22.96 | ||||||
Robert L. Moody(4)(6) | 493,919 | (7)Direct | 1.84 | |||||
557,025 | (8)(9)Indirect | 2.08 | ||||||
6,157,822 | (5)Indirect | 22.96 | ||||||
Russell S. Moody(4) | 8,000 | (2)Direct | * | |||||
William L. Moody IV(4)(6) | 98,240 | (10)Direct | * | |||||
Frank P. Williamson | 5,717 | (11)Direct | * | |||||
James D. Yarbrough | 8,000 | (2)Direct | * | |||||
Stephen E. Pavlicek | 800 | Direct | * | |||||
Gregory V. Ostergren | 1,000 | Direct | * | |||||
500 | Indirect | |||||||
David A. Behrens | 2,000 | Direct | * | |||||
All Directors and Executive Officers as a Group | 702,379 | Direct | 2.62 | |||||
6,715,457 | Indirect | 25.04 | ||||||
7,417,836 | 27.66 |
* | Less than 1%. | |
(1) | Includes 4,667 shares of our Restricted Stock. | |
(2) | Shares of our Restricted Stock. |
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(3) | Includes 60,000 shares of our Restricted Stock. | |
(4) | Robert L. Moody and William L. Moody IV are life income beneficiaries of Trust 19. Frances Anne Moody-Dahlberg and Russell S. Moody, two of our directors, are children of Robert L. Moody and, as such, have a contingent residuary interest in Robert L. Moody’s beneficial interest in Trust 19. The numbers in the table above do not include shares held in Trust 19. (See Footnote 3 under “Security Ownership of Certain Beneficial Owners” above for additional information about Trust 19.) | |
(5) | These shares are owned by The Moody Foundation, of which Frances Anne Moody-Dahlberg and Robert L. Moody are Trustees. (See “Security Ownership of Certain Beneficial Owners” above.) | |
(6) | Robert L. Moody and William L. Moody IV are life income beneficiaries of the Libbie Shearn Moody Trust. Robert L. Moody has advised management that he has assigned all of his life income interest in such trust to National Western Life Insurance Company, a Colorado insurance company controlled by him. The numbers in the table above do not include shares held in the Libbie Shearn Moody Trust. (See Footnote 2 under “Security Ownership of Certain Beneficial Owners” above for additional information about such trust.) | |
(7) | Includes 150,000 shares of our Restricted Stock. | |
(8) | Robert L. Moody is the sole owner of the 1% general partner in the M-N Family Limited Partnership (the “M-N Partnership”), which owns 507,025 shares of our common stock. As the sole owner of the general partner of the M-N Partnership, Robert L. Moody has the indirect power to manage the assets of the M-N Partnership, including voting the M-N Partnership’s 507,025 shares of our common stock. | |
(9) | Robert L. Moody is a 1% general partner in the RLMFLP Limited Partnership (the “RLMFLP Partnership”), which owns 50,000 shares of our Restricted Stock. As the sole general partner of the RLMFLP Partnership, Robert L. Moody has the power to manage the assets of the RLMFLP Partnership, including voting the RLMFLP Partnership’s 50,000 shares of our Restricted Stock. | |
(10) | Includes 8,000 shares of our Restricted Stock. | |
(11) | Includes 4,667 shares of our Restricted Stock. |
Name of | Amount and Nature of | Percent of | ||||||
Beneficial Owner | Beneficial Ownership | Class | ||||||
Irwin M. Herz, Jr. | 16,815 | (1)Direct | * | |||||
9,550 | (2)Indirect | * | ||||||
R. Eugene Lucas | 8,684 | (1)Direct | * | |||||
13 | (3)Indirect | * | ||||||
E. Douglas McLeod | 8,000 | (4) | * | |||||
Robert L. Moody, Jr. | 1,714 | (5) Direct | * | |||||
9,000 | (4) Indirect | * |
* | Less than 1%. | |
(1) | Includes 8,000 shares of our Restricted Stock | |
(2) | Shares owned by the Three R Trusts, of which Mr. Herz is Trustee. (See Footnote 4 under “Security Ownership of Certain Beneficial Owners” above for additional information about the Three R Trusts.) | |
(3) | Shares owned by spouse. | |
(4) | Shares of our Restricted Stock. | |
(5) | Includes 1,333 shares of our Restricted Stock. |
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Year | ||||||||||
First | ||||||||||
Elected | ||||||||||
Name | Age | Principal Occupation and Background | to Board | |||||||
Arthur O. Dummer(1) | 75 | President, The Donner Company (privately owned actuarial consulting company), Salt Lake City, Utah; Past Chairman of the Board of Directors of the National Organization of Life and Health Guaranty Associations, Herndon, Virginia; Director of Casualty Underwriters Insurance Company, Salt Lake City, Utah (privately owned insurance company); Director, Chairman of the Board of Directors of American Community Mutual Insurance Company, Livonia, Michigan (mutual insurance company); President and Director of Western United Holding Company, Spokane, Washington (privately owned insurance holding company); Past Director of Beneficial Life Insurance Company, Salt Lake City, Utah; Aurora National Life Assurance Company, Los Angeles, California; Continental Western Life Insurance Company, Des Moines, Iowa; Utah Home Fire Insurance Company, Salt Lake City, Utah; and PHA Life Insurance Company, Portland, Oregon (all privately owned insurance companies); Past Director of National Western Life Insurance Company, Austin, Texas. | 2004 | |||||||
Dr. Shelby M. Elliott(2)(3) | 82 | President-Emeritus of Texas Chiropractic College since 2004; President of Texas Chiropractic College from 1990 through 2003; Director of Moody National Bank from March 2000 to March 2004 (privately owned bank); Past Director of First Texas Bank, Vidor, Texas (privately owned bank); Past Director of Yettie Kersting Memorial Hospital, Liberty, Texas; and Past Chairman of the American Chiropractic Association. | 2004 | |||||||
G. Richard Ferdinandtsen(4)(7) | 72 | President of the Company since April 2000 and Chief Operating Officer since April 1997; also a director and/or officer of each principal subsidiary of the Company. Prior positions with the Company include Senior Executive Vice President, Chief Administrative Officer from April 1996 to April 1997; Senior Vice President, Health Insurance from April 1993 to April 1996; and Senior Vice President, Group Insurance from July 1990 to April 1993. Prior to joining the Company, Mr. Ferdinandtsen served as President and Chief Operating Officer of American Security Life Insurance Company from April 1983 to January 1991. | 1997 | |||||||
Frances Anne Moody- Dahlberg(5)(6) | 39 | Executive Director of The Moody Foundation (charitable and educational foundation) since January 1998, and a Trustee of The Moody Foundation since February 2004; Director of National Western Life Insurance Company, Austin, Texas; Director of Gal-Tex Hotel Corporation (hotel management corporation) from March 2000 to December 2003; Director of The Moody Endowment (charitable corporation) from 1991 to February 2004. | 1987 |
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Year | ||||||||||
First | ||||||||||
Elected | ||||||||||
Name | Age | Principal Occupation and Background | to Board | |||||||
Robert L. Moody(4)(5) | 73 | Chief Executive Officer since July 1991 and Chairman of the Board since 1982; Chairman of the Board, Chief Executive Officer and Director of Moody National Bank (banking services); Chairman of the Board, Chief Executive Officer and Director of National Western Life Insurance Company, Austin, Texas; Trustee of The Moody Foundation (charitable and educational foundation). | 1960 | |||||||
Russell S. Moody(5)(6) | 48 | Investments, League City, Texas. Director of National Western Life Insurance Company, Austin, Texas; Director of Gal-Tex Hotel Corporation (hotel management company) from March 2000 to December 2003. | 1986 | |||||||
William L. Moody IV(4)(7) | 84 | Investments and Ranching, Oil and Gas, Galveston, Texas; Trustee, Board of Trustees of Rosenberg Library (charitable organization); Trustee, University of Texas Medical Branch Development Board (charitable organization); President and Director of Moody Ranches, Inc. (investments and ranching); Director of American National Life Insurance Company of Texas (subsidiary life insurance company). | 1951 | |||||||
Frank P. Williamson(1)(2)(3) | 76 | Retired Pharmacist; Director of SM&R Investments, Inc. and American National Investment Accounts, Inc. from 1997 to March, 2004 (mutual funds advised by a Company subsidiary). | 2004 | |||||||
James D. Yarbrough(1)(2) | 53 | County Judge, County of Galveston, Texas since January 1995; James D. Yarbrough & Co., October 1989 through December 1994 (privately owned contract management and financial consulting firm); Member, Galveston County Economic Development Alliance; Advisory Director, Texas First Bank - Galveston, Galveston, Texas (privately owned bank); Ex-Officio Director, Texas City-LaMarque Chamber of Commerce; Member, Development and Advisory Council, University of Houston — Clear Lake, Houston, Texas; Director, Health Facilities Development Corporation of Galveston County, Texas; Director, Juvenile Justice Alternate Education Program Board of Galveston County, Texas; Director, Juvenile Board of Galveston County, Texas; Director, Purchasing Agent Board of Galveston County, Texas; Director, Texas Environmental Research Consortium (non-profit corporation); Member, Governor’s Commission for Disaster Recovery and Renewal. | 2001 |
(1) | Member of the Audit Committee | |
(2) | Member of the Compensation Committee | |
(3) | Member of the Nominating Committee | |
(4) | Member of the Executive Committee | |
(5) | Robert L. Moody is Chairman of the Board, Chief Executive Officer and controlling shareholder of National Western Life Insurance Company, a publicly traded life insurance company. | |
(6) | The Moody Foundation owns 34.0% and the Libbie Shearn Moody Trust owns 50.2% of Gal-Tex Hotel Corporation. | |
(7) | Member of the Finance Committee |
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Year First | Years | |||||||||||
Appointed | Served as | |||||||||||
Advisory | a | |||||||||||
Name | Age | Principal Occupation and Background | Director | Director | ||||||||
Irwin M. Herz, Jr. | 68 | Partner of Greer, Herz & Adams, L.L.P., General Counsel to the Company; Trustee of the Three R Trusts (trust for the benefit of the children of Robert L. Moody). | 2004 | 1984 to 2004 | ||||||||
R. Eugene Lucas(1) | 83 | President and Director of Gal-Tex Hotel Corporation, Gal-Tenn Hotel Corporation, Gal-Tex Woodstock, Inc., and LHH Hospitality, LLC (hospitality and hotel management companies); President of Colorado Landmark Hotels, LLC, Kentucky Landmark Hotels, LLC, and Virginia Landmark Hotels, LLC (hospitality and hotel management companies); Director of Colonel Museum, Inc. (charitable corporation); President and Director of 1859-Beverage Company (hospitality company). | 2004 | 1981 to 2004 | ||||||||
E. Douglas McLeod(2) | 67 | Director of Development of The Moody Foundation (charitable and educational foundation); Chairman and Director of Moody Gardens, Inc. (charitable corporation); Attorney; Director of National Western Life Insurance Company, Austin, Texas; Vice President and Director of Colonel Museum, Inc. (charitable corporation); Past Director and past Chairman of Center for Transportation and Commerce (charitable corporation); Director and Executive Board Member, South Texas College of Law (law school); Director, San Jacinto Museum of History. | 2004 | 1984 to 2004 | ||||||||
Robert L. Moody, Jr. | 49 | President and Director of Moody Insurance Group, Inc. (privately owned insurance agency); Director of Moody National Bank; Director of ANREM Corporation (subsidiary real estate management corporation); Director of HomeTown Bank, National Association (national bank); Trustee of the Moody Endowment (charitable corporation); Ranching. | 2009 | 1982 to 1987 |
(1) | The Moody Foundation owns 34.0% and the Libbie Shearn Moody Trust owns 50.2% of Gal-Tex Hotel Corporation. | |
(2) | Robert L. Moody is Chairman of the Board, Chief Executive Officer and controlling shareholder of National Western Life Insurance Company, a publicly traded life insurance company. |
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Name of Officer | Age | Position (Year Elected to Position) | ||||
James E. Pozzi | 58 | Senior Executive Vice President, Chief Administrative Officer (2008); Senior Executive Vice President, Corporate Planning, Systems and Life Administration (2004-2008) | ||||
Ronald J. Welch | 63 | Senior Executive Vice President, Corporate Risk Officer & Chief Actuary (2008); Senior Executive Vice President, Chief Actuary and Chief Corporate Risk Management Officer (2004-2008) | ||||
David A. Behrens | 46 | Executive Vice President, Independent Marketing (1999) | ||||
Bill J. Garrison | 75 | Executive Vice President, Director of Career Sales & Service Division (1988) | ||||
Michael W. McCroskey | 66 | Executive Vice President, Investments (1995); Treasurer (2001) | ||||
Gregory V. Ostergren | 53 | Executive Vice President, Director of Multiple Line (2000) | ||||
Dwain A. Akins | 58 | Senior Vice President, Corporate Affairs, Chief Corporate Compliance Officer (2006); Vice President, Corporate Compliance (2003-2006) | ||||
Albert L. Amato, Jr. | 60 | Senior Vice President, Life Insurance Administration (1994) | ||||
Scott F. Brast | 45 | Senior Vice President, Real Estate / Mortgage Loan Investments (2005); Vice President, Real Estate Investments (2000-2005) | ||||
Frank V. Broll, Jr. | 59 | Senior Vice President & Actuary (2005); Vice President & Actuary (1986-2005) | ||||
Gordon D. Dixon | 63 | Senior Vice President, Securities Investments (2004) | ||||
Bernard S. Gerwel | 50 | Senior Vice President, Chief MLEA Administrative Officer (2006); Senior Vice President, Marketing Information and Technology Services of American National Property and Casualty Company (2002). | ||||
Rex D. Hemme | 60 | Senior Vice President & Actuary (2005); Vice President & Actuary (1993-2005) | ||||
Johnny D. Johnson | 56 | Senior Vice President, Corporate Chief Information Officer (2008); Senior Vice President, Chief Information Officer (2007); Chief Information Officer, AEGON Financial Partners, AEGON USA (2002-2007) | ||||
Bruce M. LePard | 52 | Senior Vice President, Human Resources (2006); Vice President, Human Resources of ING Investment Management, Inc. (2000-2005) | ||||
James W. Pangburn | 52 | Senior Vice President, Credit Insurance Division (2004) | ||||
Stephen E. Pavlicek | 62 | Senior Vice President, Chief Financial Officer (2007); Senior Vice President, Controller (1996-2007) | ||||
Ronald C. Price | 57 | Senior Vice President, Chief Marketing Officer — Career Life Agencies (2004) | ||||
Steven H. Schouweiler | 62 | Senior Vice President, Health Insurance Operations (1998) | ||||
Shannon L. Smith | 49 | Senior Vice President, Chief Multiple Line Marketing Officer (July 2008); Program Marketing Manager of Meadowbrook Insurance Group (April 2008 — July 2008); Vice President — Marketing and Distribution of Lincoln General Insurance Company (July 2003 — October 2007) | ||||
Hoyt J. Strickland | 52 | Senior Vice President, Career Sales and Service Division (April 2009); National Field Director, Career Sales and Service Division (2001 — April 2009) |
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• | Oversight of our compensation programs; |
• | Objectives of our compensation programs; |
• | How we determine each element of compensation; |
• | Elements of compensation; and |
• | Other important compensation policies. |
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• | Attract and retain experienced, highly qualified individuals who are in a position to make significant contributions to our success; |
• | Drive exceptional performance and motivate our executive officers to achieve desired financial results; |
• | Provide our executives with opportunities to develop a significant ownership stake in the Company; and |
• | Align the interests of our executive officers with the long-term interests of our shareholders. |
• | The compensation of our Chairman and Chief Executive Officer (“CEO”) was compared to that of CEOs at a peer group of companies and to survey data. |
• | The compensation of our President and Chief Operating Officer was compared to that of the number two executive officer at the peer companies. Because the President and Chief Operating Officer has significantly greater responsibilities compared to Chief Operating Officer job descriptions provided in surveys, we excluded the survey data for this position. |
• | The compensation of our other Named Executive Officers was compared to that of executives in comparable positions using published survey data only, as they were not identified at the time Mercer conducted the peer company analysis. |
Cincinnati Financial Corporation
The Hanover Insurance Group, Inc.
HCC Insurance Holdings, Inc.
Horace Mann Educators Corporation
Old Republic International Corporation
Phoenix Companies, Inc.
Protective Life Corporation
StanCorp Financial Group, Inc.
Torchmark Corporation
Transatlantic Holdings, Inc.
Unitrin, Inc.
White Mountains Insurance Group, Ltd.
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• | Mercer’s Benchmark Database; |
• | Watson Wyatt’s Survey Report on Top Management Compensation; |
• | Watson Wyatt’s Survey Report on Health, Annuity, & Life Insurance Positions; |
• | Watson Wyatt’s Survey Report on Property & Casualty Insurance Positions; and |
• | LOMA’s Executive Compensation Survey Report. |
• | As of the end of 2006, our three-year total shareholder return outperformed the peer group and the S&P 500 median. |
• | Chairman and Chief Executive Officer total direct compensation was in the top quartile of the peer organizations. Our three-year total shareholder return performance as of fiscal year end 2006 was higher than the peer group and the S&P 500 median. Mercer also found that while our Chairman and CEO’s pay mix was heavily weighted toward base salary, his interests were adequately aligned with shareholders given his significant stock ownership. Later in 2008, Mercer conducted an additional performance analysis indicating that our three-year total shareholder return as of fiscal year end 2007 was positioned at the 75th percentile of the peers. |
• | President and Chief Operating Officer total direct compensation approximated the peer group median. |
• | Senior Vice President, Chief Financial Officer; Executive Vice President, Director of Multiple Line; and Executive Vice President, Independent Marketing total direct compensation was below the 25th percentile. |
Element | Purpose | |
Base Salary | Provide a fixed level of competitive compensation | |
Annual Incentive Compensation | Focus executive attention on key financial and operational measures | |
Long-Term Incentive Compensation (consisting of restricted stock and stock appreciation rights) | Align the interests of executives with long-term shareholder value and retain executive talent | |
Retirement Benefits (consisting of qualified and non-qualified Company pension plans and the Company’s 401(k) plan) | Assist executives in providing for their financial security and future personal needs | |
Welfare Benefits (consisting of basic and supplemental health insurance, disability protection, and life insurance) | Assist executives in providing for their current personal needs |
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1. | Total Consolidated Operating Revenues. |
2. | Adjusted Consolidated After Tax GAAP Income: This is consolidated net income, adjusted for changes in unrealized capital gains and losses, and adjusted for unusual items. This incentive is based on a five-year average of adjusted consolidated after tax GAAP income. | ||
3. | Return on Equity from Insurance Lines (adjusted for unusual items). | ||
4. | Total Corporate Return on Equity: This is adjusted gain divided by adjusted equity. |
• | Adjusted gain is consolidated net income, adjusted for changes in unrealized capital gains/losses, and adjusted for unusual items. |
• | Adjusted equity is beginning shareholder’s equity minus unrealized gain/loss on bonds (FAS 115). |
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5. | Weighted Direct Earned Premium: This is the total weighted direct earned premium, which is premium income to us that is weighted in accordance with industry standards for measuring premium. Pursuant to such standards, recurring premiums are weighted at 100%, and single life premiums, excess life premiums, and annuity deposits are weighted at 10% of the actual amount received. Direct earned premium refers to premium actually received. |
6. | Shared Services Controllable Costs: This is the actual controllable non-distribution related operating expenses for our home office and League City, Texas operations. |
7. | Timeliness of Report: This represents the average working days past the end of the month until our monthly operating reports are distributed, excluding the month of January and the end of each quarter. |
8. | Multiple Line Direct Life Earned Premium: This includes life and annuity weighted direct earned premium for Multiple Line Marketing operations. |
9. | Multiple Line Direct Written P&C Premium: This consists of direct written premium for our primary property and casualty insurance operations. |
10. | Multiple Line After-Tax GAAP Profit: This represents the total Multiple Line Marketing operations after-tax GAAP profit, excluding the after-tax impact of net catastrophic losses, realized investment gains (losses), and very extraordinary items. |
11. | Multiple Line Weighted Life and Annuity Premium Sales: This consists of weighted life and annuity sales for Multiple Line Marketing operations. Premium sales is a measurement of annualized premium expected to be collected from in-force policies. |
12. | ANPAC Profit: This represents the consolidated GAAP after-tax gain from insurance operations for American National Property and Casualty Company and its subsidiaries, including investment earnings from unallocated surplus, and excluding the after-tax impact of net catastrophic losses, realized investment gains (losses), and very extraordinary items. |
13. | Farm Family Profit: This is the consolidated GAAP after-tax operating net income for Farm Family Casualty Insurance Company, United Farm Family Insurance Company, and Farm Family Life Insurance Company, which equals net income excluding the after-tax impact of net catastrophic losses, realized investment gains (losses), and very extraordinary items. |
14. | Multiple Line ANICO Profit: This is the consolidated GAAP operating net income for Multiple Line Marketing operating at the Company, which equals net income excluding realized investment gains (losses) and very unusual items. |
15. | Independent Marketing Group Life Weighted Direct Earned Premium: This is life weighted direct earned premium associated with Independent Marketing Group operations. |
16. | Independent Marketing Group Annuity Statutory Reserves: This is annuity statutory reserves associated with Independent Marketing Group operations. |
17. | Independent Marketing Group Marketing Expense Ratio: This is the total expenses associated with the Independent Marketing Group distribution channel divided by total premiums collected through the Independent Marketing Group. |
18. | Independent Marketing Group Profit before Federal Income Tax: This represents the total Independent Marketing Group GAAP net income before federal income taxes. |
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Named Executive Officers
Performance Measure | Moody | Ferdinandtsen | Pavlicek | Ostergren | Behrens | |||||||||||||||
Consolidated Total Annual Revenues | 16 | % | 22.5 | % | 11 | % | — | — | ||||||||||||
Adjusted Consolidated After Tax GAAP Income | 68 | % | 10 | % | — | — | — | |||||||||||||
Return on Equity from Insurance Lines | 8 | % | 22.5 | % | 29 | % | — | — | ||||||||||||
Total Corporate Return on Equity | 8 | % | 22.5 | % | — | — | — | |||||||||||||
Weighted Direct Earned Premium | — | 22.5 | % | 11 | % | — | — | |||||||||||||
Shared Services Controllable Costs | — | — | 29 | % | — | — | ||||||||||||||
Timeliness of Report | — | — | 20 | % | — | — | ||||||||||||||
Multiple Line Direct Life Earned Premium | — | — | — | 10 | % | — | ||||||||||||||
Multiple Line Direct Written P&C Premium | — | — | — | 20 | % | — | ||||||||||||||
Multiple Line After-Tax GAAP Profit | — | — | — | 25 | % | — | ||||||||||||||
Multiple Line Weighted Life and Annuity Premium Sales | — | — | — | 10 | % | — | ||||||||||||||
ANPAC Profit | — | — | — | 20 | % | — | ||||||||||||||
Farm Family Profit | — | — | — | 10 | % | — | ||||||||||||||
Multiple Line ANICO Profit | — | — | — | 5 | % | — | ||||||||||||||
Independent Marketing Life Weighted Direct Earned Premium | — | — | — | — | 25 | % | ||||||||||||||
Independent Marketing Annuity Statutory Reserves | — | — | — | — | 25 | % | ||||||||||||||
Independent Marketing - Marketing Expense Ratio | — | — | — | — | 25 | % | ||||||||||||||
Independent Marketing Profit Before FIT | — | — | — | — | 25 | % |
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Level 2 | ||||||||||||||||
Performance Measure | Level 1 | (Target) | Level 3 | 2008 Actual | ||||||||||||
Consolidated Total Annual Revenues | $2.9 billion | $3.0 billion | $3.1 billion | $2.9 billion | ||||||||||||
Adjusted Consolidated After Tax GAAP Income | 50% of shareholders’ dividend | 75% of shareholders’ dividend | 100% of shareholders’ dividend | 226% | ||||||||||||
Return on Equity from Insurance Lines | 8.0% | 8.5% | 9.0% | 1.65% | ||||||||||||
Total Corporate Return on Equity | 8.0% | 8.5% | 9.0% | -7.68% | ||||||||||||
Weighted Direct Earned Premium | $2.0 billion | $2.1 billion | $2.2 billion | $2.2 billion | ||||||||||||
Shared Services Controllable Costs | $109.8 million | $111.8 million | $113.8 million | $113.8 million | ||||||||||||
Timeliness of Report | 17 days | 15 days | 13 days | 15.4 days | ||||||||||||
Multiple Line Direct Life Earned Premium | $150.0 million | $151.3 million | $152.8 million | $142.8 million | ||||||||||||
Multiple Line Direct Written P&C Premium | $1.12 billion | $1.16 billion | $1.20 billion | $1.119 billion | ||||||||||||
Multiple Line After- Tax GAAP Profit | $ | 116,096,000 | $ | 136,583,000 | $ | 157,071,000 | $ | 149,200,000 | ||||||||
Multiple Line Weighted Life and Annuity Premium Sales | $26.8 million | $28.3 million | $29.8 million | $25.5 million | ||||||||||||
ANPAC Profit | $ | 64,114,000 | $ | 71,238,000 | $ | 78,362,000 | $ | 106,100,000 | ||||||||
Farm Family Profit | $ | 34,720,000 | $ | 38,580,000 | $ | 42,440,000 | $ | 34,000,000 | ||||||||
Multiple Line ANICO Profit | $ | 12,707,000 | $ | 14,950,000 | $ | 17,192,000 | $ | 9,000,000 | ||||||||
Independent Marketing Life Weighted Direct Earned Premium | $65 million | $75 million | $85 million | $92 million | ||||||||||||
Independent Marketing Annuity Statutory Reserves | $6.3 billion | $6.4 billion | $6.5 billion | $6.95 billion | ||||||||||||
Independent Marketing - Marketing Expense Ratio | 145% | 135% | 125% | 132% | ||||||||||||
Independent Marketing Profit Before FIT | $36.6 million | $39.6 million | $42.6 million | $18.8 million |
* | Information regarding our performance measures is provided in the limited context of our Executive Incentive Compensation Program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts. |
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Actual Aggregate | ||||||||||||||||
Incentive Award | ||||||||||||||||
Name/Title | Level 1 | Level 2 | Level 3 | Earned | ||||||||||||
Robert L. Moody, Chairman of the Board of Directors and Chief Executive Officer | 12.33 | % | 24.67 | % | 37 | % | 27 | %(1) | ||||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | 20 | % | 40 | % | 60 | % | 24 | %(2) | ||||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | 12 | % | 24 | % | 36 | % | 18 | %(3) | ||||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | 18 | % | 36 | % | 54 | % | 9 | %(4) | ||||||||
David A. Behrens, Executive Vice President, Independent Marketing | 12 | % | 24 | % | 36 | % | 24 | %(5) |
(1) | Mr. Moody’s total annual incentive payment was $1,350,000, of which $100,000 was attributable to Consolidated Total Annual Revenues, and $1,250,000 was attributable to Adjusted Consolidated After Tax GAAP Income. No amounts were paid with respect to Return on Equity from Insurance Lines or Total Return on Corporate Equity. | |
(2) | Mr. Ferdinandtsen’s total annual incentive payment was $240,000, of which $45,000 was attributable to Consolidated Total Annual Revenues; $60,000 was attributable to Adjusted Consolidated After Tax GAAP Income; and $135,000 was attributable to Weighted Direct Earned Premium. No amounts were paid with respect to Return on Equity from Insurance Lines or Total Return on Corporate Equity. | |
(3) | Mr. Pavlicek’s total annual incentive payment was $45,042, of which $3,305 was attributable to Consolidated Total Annual Revenues; $9,940 was attributable to Weighted Direct Earned Premium; $25,843 was attributable to Shared Services Controllable Costs; and $5,964 was attributable to Timeliness of Report. No amount was paid with respect to Return on Equity from Insurance Lines. | |
(4) | Mr. Ostergren’s total annual incentive payment was $49,792, which was attributable entirely to Multiple Line After-Tax GAAP Profit. No amounts were paid with respect to Multiple Line Direct Life Earned Premium, Multiple Line Direct Written P&C Premium, Multiple Line Weighted Life and Annuity Premium Sales, ANPAC Profit, Farm Family Profit, or Multiple Line ANICO Profit. | |
(5) | Mr. Behrens’ total annual incentive payment was $74,555, of which $27,958 was attributable to Independent Marketing Life Weighted Direct Earned Premium; $27,958 was attributable to Independent Marketing Annuity Statutory Reserves; and $18,639 was attributable to Independent Marketing — Marketing Expense Ratio. No amount was paid with respect to Independent Marketing Profit Before FIT. |
1. | Life Premiums.This represents premiums paid on life policies sold through the Independent Marketing Group. For purposes of this performance measure, only ten percent of premiums paid with respect to excess and single premium policies are included. |
2. | Annuity Sales.This represents new deposits in annuity products sold through the Independent Marketing Group. Deposits received on group variable annuity product in amounts in excess of $5,000,000 per individual policy will be counted at a rate of 20% of other annuity premium. |
3. | Mutual Fund Sales.This represents new investment in mutual funds managed by our subsidiary Securities Management and Research, Inc., a registered investment adviser and broker-dealer, and sold through the Independent Marketing Group. Incentive compensation payable under this performance measurement is paid directly by Securities Management and Research, Inc. |
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Actual Incentive | ||||||||||||||||
Level 2 | Award Earned (as a | |||||||||||||||
Performance Measure | Level 1 | (Target) | Level 3 | percentage of sales) | ||||||||||||
Life Premiums | 0.30 | % | 0.50 | % | 0.70 | % | 0.58 | % | ||||||||
Annuities | 0.015 | % | 0.025 | % | 0.035 | % | 0.03 | % | ||||||||
Mutual Funds | 0.015 | % | 0.025 | % | 0.035 | % | 0 | % |
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• | Base Salary:We have implemented a base salary freeze for all Named Executive Officers. In addition,$3 million of the CEO’s base salary has been re-allocated to annual incentive opportunity, increasing the emphasis on performance-based pay. |
• | Annual Incentives:Annual incentives will be settled in a combination of cash and service-based restricted stock. The mix of cash and equity will be determined by the Board Compensation Committee based on internal equity and the needs of the organization. Aggregate cash incentive payouts will be capped at target (Level 2); however, Named Executive Officers can earn up to 150% of target for any individual performance measure. |
• | Timing of Equity Grants:Going forward, we expect that equity will be granted annually instead of every three years. |
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• | Evaluated the competitive positioning of our top eighteen executives’ base salaries, annual incentive and long-term incentive compensation relative our primary peers and the broader insurance industry; |
• | Assessed the alignment of our compensation levels for the Named Executive Officers relative to the performance of the Company against our primary peers; |
• | Assisted with the development of the 2009 compensation program for our top eighteen executives, including recommendations for base salary, incentive compensation opportunity, the performance required to earn such incentives, and the form of incentives to be provided in cash and equity; |
• | Provided input on changes to the American National Insurance Company 1999 Stock and Incentive Plan document for compliance with Section 162(m) of the Internal Revenue Code; |
• | Assisted with the preparation of the Compensation Discussion and Analysis for this registration statement; |
• | Briefed the Committee on executive compensation trends among our peers and the broader industry; |
• | Provided ongoing advice to the Board Compensation Committee as needed for ad hoc requests. |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Non-qualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Name and | Stock | SAR | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||
Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | |||||||||||||||||||||||||||||
Position | Year | (a) | (b) | (c) | (d) | (e) | (f) | (g) | Total | |||||||||||||||||||||||||||
Robert L. Moody, Chairman of the Board and Chief Executive Officer | 2008 | $ | 5,000,000 | $ | 157 | $ | 1,535,400 | $ | 0 | $ | 1,350,000 | $ | 5,788,062 | $ | 603,599 | * | $ | 14,277,218 | ||||||||||||||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | 2008 | $ | 1,000,000 | $ | 158 | $ | 583,160 | $ | 0 | $ | 240,000 | $ | 1,458,632 | $ | 199,819 | * | $ | 3,481,769 | ||||||||||||||||||
David A. Behrens, Executive Vice President, Independent Marketing | 2008 | $ | 310,646 | $ | 136 | $ | 0 | -$40,609 | $ | 839,133 | $ | 52,539 | $ | 24,854 | $ | 1,186,699 | ||||||||||||||||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | 2008 | $ | 533,240 | $ | 301 | $ | 0 | -$175,139 | $ | 49,792 | $ | 292,655 | $ | 24,498 | $ | 725,347 | ||||||||||||||||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | 2008 | $ | 248,493 | $ | 136 | $ | 0 | -$37,121 | $ | 45,052 | $ | 203,564 | $ | 24,774 | $ | 484,898 |
* | Consists primarily of dividends on restricted stock, as shown in the “All Other Compensation Table — Named Executive Officers” below. |
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Group Life | ||||||||||||||||
Name and | Restricted Stock | Insurance | ||||||||||||||
Principal Position | Dividends | Premium(1) | Perquisites | Total | ||||||||||||
Robert L. Moody, Chairman of the Board and Chief Executive Officer | $ | 577,500 | $ | 1,112 | $ | 24,987 | (2)(3)(4) | $ | 603,599 | |||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | $ | 169,400 | $ | 1,112 | $ | 29,307 | (2)(3)(4) | $ | 199,819 | |||||||
David A. Behrens, Executive Vice President, Independent Marketing | $ | 0 | $ | 180 | $ | 24,674 | (2)(3) | $ | 24,854 | |||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | $ | 0 | $ | 516 | $ | 23,982 | (2)(3) | $ | 24,498 | |||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | $ | 0 | $ | 792 | $ | 23,982 | (2)(3) | $ | 24,774 |
(1) | We provide group life insurance coverage to all salaried employees. The amount included in the table represents the premium for such coverage for each Named Executive Officer. | |
(2) | Includes our Merit Plan benefit. The Merit Plan is an insured medical plan that supplements our core medical insurance plan. Coverage under the Merit Plan is provided for all officers of the level of vice president and above, as well as for their spouses and any dependents. The Merit Plan provides coverage for co-pays, deductibles, and other out-of-pocket expenses that are not covered by the core medical insurance plan. Benefits under the Merit Plan are taxable to the recipient only to the extent provided for medical expenses that would not be deductible by the recipient for federal income tax purposes. The Merit Plan is underwritten by National Western Life Insurance Company, of which Robert L. Moody is Chairman of the Board, Chief Executive Officer, and the controlling stockholder. Total premium and fees paid to National Western Life Insurance Company for all Merit Plan participants in 2008 was $1,173,950. As there is no individual underwriting or individual premium assessed in connection with the Merit Plan, the amount shown in the table is an average premium computed by dividing the total premium for all Merit Plan participants by the number of participants. | |
(3) | Includes guest travel, lodging, entertainment, and food and beverage at our business conferences or other events. | |
(4) | Includes an automobile allowance. |
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• | The stock and SAR awards shown in columns (c) and (d) of the Summary Compensation Table, and |
• | The Executive Incentive Compensation Program opportunities granted for 2008, which were paid in 2009 and are shown in column (e) of the Summary Compensation Table. |
All | ||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||
Stock | All Other | |||||||||||||||||||||||||||||||||
Awards: | SAR | Exercise | Grant | |||||||||||||||||||||||||||||||
Estimated Future Payouts | Number | Awards: | or Base | Date Fair | ||||||||||||||||||||||||||||||
Under | of | Number of | Price of | Value of | ||||||||||||||||||||||||||||||
Non-Equity Incentive Plan | Shares | Securities | SAR | Stock and | ||||||||||||||||||||||||||||||
Grant | Meeting | Awards | of Stock | Underlying | Awards | SAR | ||||||||||||||||||||||||||||
Date | Date | Threshold | Target | Maximum | or Units | SARS | ($/share) | Awards | ||||||||||||||||||||||||||
Name | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||||||||||
Robert L. Moody, Chairman of the Board and Chief Executive Officer | 5/1/08 | 4/24/08 | $ | 4,400,000 | $ | 7,700,000 | * | 50,000 | $ | 5,824,000 | ||||||||||||||||||||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | 5/1/08 | 4/24/08 | $ | 800,000 | $ | 1,600,000 | * | 20,000 | $ | 2,329,600 | ||||||||||||||||||||||||
David A. Behrens, | 5/1/08 | 4/24/08 | $ | 59,023 | $ | 118,045 | * | 5,000 | $ | 116.48 | $ | 582,400 | ||||||||||||||||||||||
Executive Vice President, Independent Marketing | $ | 368,717 | ||||||||||||||||||||||||||||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | 5/1/08 | 4/24/08 | $ | 266,620 | $ | 533,240 | * | 5,000 | $ | 116.48 | $ | 582,400 | ||||||||||||||||||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | 5/1/08 | 4/24/08 | $ | 62,123 | $ | 124,246 | * | 3,000 | $ | 116.48 | $ | 349,440 |
* | For 2009, non-equity incentive compensation is capped at target for each of the Named Executive Officers. |
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SAR Awards | Stock Awards | |||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||
Securities | Securities | Number of | Market Value | |||||||||||||||||||||
Underlying | Underlying | Shares of | of Shares of | |||||||||||||||||||||
Unexercised | Unexercised | SAR | SAR | Stock That | Stock That | |||||||||||||||||||
SARs | SARs | Exercise | Expiration | Have Not | Have Not | |||||||||||||||||||
Exercisable | Unexercisable | Price | Date | Vested | Vested* | |||||||||||||||||||
Name | (a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||
Robert L. Moody, | 50,000 | 1 | $ | 3,686,500 | ||||||||||||||||||||
Chairman of the Board and | 50,000 | 2 | $ | 3,686,500 | ||||||||||||||||||||
Chief Executive Officer | 50,000 | 3 | $ | 3,686,500 | ||||||||||||||||||||
50,000 | 4 | $ | 3,686,500 | |||||||||||||||||||||
G. Richard Ferdinandtsen, | 10,000 | 5 | $ | 737,300 | ||||||||||||||||||||
President and | 10,000 | 2 | $ | 737,300 | ||||||||||||||||||||
Chief Operating Officer | 20,000 | 3 | $ | 1,474,600 | ||||||||||||||||||||
20,000 | 4 | $ | 1,474,600 | |||||||||||||||||||||
David A. Behrens, | 0 | 5,000 | 6 | $ | 116.48 | 5/1/2018 | 8 | |||||||||||||||||
Executive Vice President, Independent Marketing | 1,000 | 2,000 | 7 | $ | 100.46 | 5/1/2015 | 8 | |||||||||||||||||
Gregory V. Ostergren, | 0 | 5,000 | 6 | $ | 116.48 | 5/1/2018 | 8 | |||||||||||||||||
Executive Vice President, | 3,000 | 2,000 | 7 | $ | 100.46 | 5/1/2015 | 8 | |||||||||||||||||
Director of Multiple Line | 3,000 | 0 | $ | 88.00 | 8/1/2012 | 8 | ||||||||||||||||||
Stephen E. Pavlicek, | 0 | 3,000 | 6 | $ | 116.48 | 5/1/2018 | 8 | |||||||||||||||||
Senior Vice President and | 600 | 1,200 | 7 | $ | 100.46 | 5/1/2015 | 8 | |||||||||||||||||
Chief Financial Officer | 400 | 0 | $ | 88.00 | 8/1/2012 | 8 |
* | Based on an assumed stock price of $73.73 per share, which was the closing price of the Company’s common stock on December 31, 2008. | |
1 | These restricted shares were transferred by Robert L. Moody to the RLMFLP Limited Partnership (the “RLMFLP Partnership”), of which Mr. Moody is the 1% general partner. As the sole general partner of the RLMFLP Partnership, Mr. Moody has the power to manage the assets of the RLMFLP Partnership, including voting these shares of restricted stock. Restrictions with respect to these shares lapse on August 1, 2009. | |
2 | Restrictions with respect to these shares lapse on August 1, 2012. | |
3 | Restrictions with respect to these shares lapse on May 1, 2015. | |
4 | Restrictions with respect to these shares lapse on May 1, 2018. | |
5 | Restrictions with respect to these shares lapse on August 1, 2009. | |
6 | These SARs become exercisable in five equal annual installments beginning May 1, 2009. | |
7 | These SARs become exercisable in five equal annual installments beginning May 1, 2006. | |
8 | SARs expire five years from the date they become exercisable. The date shown represents the expiration of the final SARs to become exercisable under the particular award shown. |
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Number of | ||||||||||||||
Years of | Present Value | Payments | ||||||||||||
Credited | of Accumulated | During Last | ||||||||||||
Plan Name | Service | Benefit | Fiscal Year | |||||||||||
Name | (a) | (b) | (c) | (d) | ||||||||||
Robert L. Moody, | American National | 26.6 | $ | 1,069,776 | $ | 106,771 | ||||||||
Chairman of the | Employees | |||||||||||||
Board and Chief Executive Officer | Retirement Plan | |||||||||||||
ANICO Nonqualified | 45.0 | $ | 51,310,424 | $ | 5,009,286 | |||||||||
Retirement Plan | ||||||||||||||
G. Richard | American National | 18.51 | $ | 52,866 | $ | 4,901 | ||||||||
Ferdinandtsen, | Employees | |||||||||||||
President and Chief Operating Officer | Retirement Plan | |||||||||||||
ANICO Nonqualified | 45.0 | $ | 9,976,171 | $ | 919,379 | |||||||||
Retirement Plan | ||||||||||||||
David A. Behrens, | American National | 9.92 | $ | 99,612 | $ | — | ||||||||
Executive Vice President, | Employees | |||||||||||||
Independent Marketing | Retirement Plan | |||||||||||||
ANICO Nonqualified | 9.92 | $ | 176,449 | $ | — | |||||||||
Retirement Plan for | ||||||||||||||
Certain Salaried | ||||||||||||||
Employees | ||||||||||||||
Gregory V. Ostergren, | American National | 18.18 | $ | 295,984 | $ | — | ||||||||
Executive Vice | Employees | |||||||||||||
President, Director of Multiple Line | Retirement Plan | |||||||||||||
ANICO Nonqualified | 18.18 | $ | 924,145 | $ | — | |||||||||
Retirement Plan for | ||||||||||||||
Certain Salaried | ||||||||||||||
Employees | ||||||||||||||
Stephen E. Pavlicek, | American National | 32.61 | $ | 913,631 | $ | — | ||||||||
Senior Vice President and Chief | Employees | |||||||||||||
Financial Officer | Retirement Plan | |||||||||||||
ANICO Nonqualified | 32.61 | $ | 371,118 | $ | — | |||||||||
Retirement Plan for | ||||||||||||||
Certain Salaried | ||||||||||||||
Employees |
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• | 1.667 % of the employee’s final average pay times years of service (up to 35 years), |
• | Less a “social security offset” amount equal to 0.7% (0.65% for Year of Birth after 1954) times the “Social Security covered pay” |
• | a 50%, 66 2/3%, 75% or 100% joint and survivor annuity (the employee receives a smaller benefit for life, and the employee’s designated survivor receives a benefit of 50%, 66 2/3%, 75% or 100% of the reduced amount for life), or |
• | a 10, 15 or 20 year period certain and life annuity benefit (the employee receives a smaller benefit for life and, if the employee dies before the selected period, the employee’s designated survivor receives the reduced amount until the end of the period), or |
• | a lump sum benefit, if eligible under the plan (most management/professional employees would be). |
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Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions | Contributions | Earnings in | Withdrawals/ | Balance at | ||||||||||||||||
in Last Fiscal | in Last Fiscal | Last Fiscal | Distributions in | Last Fiscal | ||||||||||||||||
Plan | Year | Year | Year | Last Fiscal Year | Year | |||||||||||||||
Frozen Farm Family Plan | $ | 0 | $ | 0 | $ | 4,788 | $ | 0 | $ | 84,412 | ||||||||||
Current Farm Family Plan | $ | 20,000 | (1) | $ | 0 | $ | 4,524 | $ | 0 | $ | 91,983 |
(1) | This amount is included in column (c) (Salary) of the Summary Compensation Table for Mr. Ostergren. |
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Potential Payout on | ||||||||||||||||
Retirement or | Potential Payout if | Potential Payout if | ||||||||||||||
Voluntary | Terminated Upon | Potential Payout if | Terminated | |||||||||||||
Termination | Disability | Terminated Upon Death | Involuntarily | |||||||||||||
12/31/08 | 12/31/08 | 12/31/08 | 12/31/08 | |||||||||||||
Name | (a) | (b) | (c) | (d) | ||||||||||||
Robert L. Moody, Chairman of the Board and Chief Executive Officer | $ | 1,069,776 | $ | 1,069,776 | $ | 551,941 | $ | 1,069,776 | ||||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | $ | 52,866 | $ | 52,866 | N/A | $ | 52,866 | |||||||||
David A. Behrens, Executive Vice President, Independent Marketing | N/A | N/A | $ | 342,075 | N/A | |||||||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | N/A | N/A | $ | 538,629 | N/A | |||||||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | $ | 860,184 | $ | 860,184 | $ | 948,118 | $ | 860,184 |
Potential Payout on | ||||||||||||||||
Retirement or | Potential Payout if | Potential Payout if | ||||||||||||||
Voluntary | Terminated Upon | Potential Payout if | Terminated | |||||||||||||
Termination | Disability | Terminated Upon Death | Involuntarily | |||||||||||||
12/31/08 | 12/31/08 | 12/31/08 | 12/31/08 | |||||||||||||
Name | (a) | (b) | (c) | (d) | ||||||||||||
Robert L. Moody, Chairman of the Board and Chief Executive Officer | $ | 51,310,424 | $ | 51,310,424 | $ | 47,061,331 | $ | 51,310,424 | ||||||||
G. Richard Ferdinandtsen, President and Chief Operating Officer | $ | 9,976,171 | $ | 9,976,171 | $ | 9,143,290 | $ | 9,976,171 | ||||||||
David A. Behrens, Executive Vice President, Independent Marketing | N/A | N/A | $ | 605,937 | N/A | |||||||||||
Gregory V. Ostergren, Executive Vice President, Director of Multiple Line | N/A | N/A | $ | 1,681,753 | N/A | |||||||||||
Stephen E. Pavlicek, Senior Vice President and Chief Financial Officer | $ | 348,747 | $ | 348,747 | $ | 385,126 | $ | 348,747 |
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Fees Earned or | All Other | |||||||||||||||
Paid in Cash | Stock Awards | Compensation | ||||||||||||||
Name | (a) | (b) | (c) | Total | ||||||||||||
Directors | ||||||||||||||||
Arthur O. Dummer | $ | 43,250 | $ | 52,085 | $ | 32,628 | $ | 127,963 | ||||||||
Shelby M. Elliott | $ | 42,750 | $ | 52,085 | $ | 30,023 | $ | 124,858 | ||||||||
Russell S. Moody | $ | 41,250 | $ | 61,416 | $ | 70,055 | $ | 172,721 | ||||||||
William L. Moody, IV | $ | 42,500 | $ | 61,416 | $ | 78,586 | $ | 182,502 | ||||||||
Frances A. Moody-Dahlberg | $ | 41,250 | $ | 61,416 | $ | 25,253 | $ | 127,919 | ||||||||
Frank P. Williamson | $ | 44,750 | $ | 52,085 | $ | 26,779 | $ | 123,614 | ||||||||
James D. Yarbrough | $ | 44,250 | $ | 61,416 | $ | 59,672 | $ | 165,338 | ||||||||
Advisory Directors* | ||||||||||||||||
Irwin M. Herz, Jr. | $ | 41,250 | $ | 61,416 | $ | 42,503 | $ | 145,169 | ||||||||
R. Eugene Lucas | $ | 41,250 | $ | 61,416 | $ | 23,100 | $ | 125,766 | ||||||||
E. Douglas McLeod | $ | 41,250 | $ | 61,416 | $ | 23,513 | $ | 126,179 |
* | Robert L. Moody, Jr. was appointed an advisory director during 2009; therefore, no compensation was paid to him for such service during 2008. |
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Restricted Stock | ||||||||||||
Name | Dividends | Perquisites | Total | |||||||||
Directors | ||||||||||||
Arthur O. Dummer | $ | 13,861 | $ | 18,767 | (1)(2) | $ | 32,628 | |||||
Shelby M. Elliott | $ | 13,861 | $ | 16,162 | (1)(2) | $ | 30,023 | |||||
Russell S. Moody | $ | 23,100 | $ | 46,955 | (1)(2) | $ | 70,055 | |||||
William L. Moody, IV | $ | 23,100 | $ | 55,486 | (1)(2) | $ | 78,586 | |||||
Frances A. Moody-Dahlberg | $ | 23,100 | $ | 2,153 | (2) | $ | 25,253 | |||||
Frank P. Williamson | $ | 13,861 | $ | 12,918 | (1) | $ | 26,779 | |||||
James D. Yarbrough | $ | 23,100 | $ | 36,572 | (1)(2) | $ | 59,672 | |||||
Advisory Directors | ||||||||||||
Irwin M. Herz, Jr. | $ | 23,100 | $ | 19,403 | (1)(2) | $ | 42,503 | |||||
R. Eugene Lucas | $ | 23,100 | $ | 0 | $ | 23,100 | ||||||
E. Douglas McLeod | $ | 23,100 | $ | 413 | (2) | $ | 23,513 |
(1) | Includes medical reimbursement plan benefit. We provide a medical reimbursement plan designed to reimburse certain medical expenses that are not covered by an underlying insurance policy for the benefit of (1) directors who are not current or former common law employees, (2) retired directors who have at least twenty (20) years of service who are not current or former common law employees, (3) designated consultants who are not current or former common law employees, (4) advisory directors who are not current or former common law employees, and (5) the spouses and any dependents of the foregoing. The amount of such benefit during 2008 for William L. Moody, IV and James D. Yarbrough was $50,542 and $30,764, respectively. The amount of such benefit to the other directors and advisory directors did not exceed thresholds for specific numerical disclosure under applicable proxy disclosure rules, although the value of such benefit is included in the Perquisites column. | |
(2) | Includes guest travel, lodging, entertainment, and food and beverage at our business conferences or other events. The amount of such benefit during 2008 for Russell S. Moody was $29,040. The amount of such benefit to the other directors and advisory directors did not exceed thresholds for specific numerical disclosure under applicable proxy disclosure rules, although the value of such benefit is included in the Perquisites column. |
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Audit | Compensation | Nominating | Executive | |||||
Director | Committee | Committee | Committee | Committee | ||||
James D. Yarbrough | X | XX | ||||||
Arthur O. Dummer1 | XX | |||||||
Dr. Shelby M. Elliott | X | XX | ||||||
Frank P. Williamson | X | X | X | |||||
William L. Moody IV | X |
X = Member | ||
XX = Committee Chair | ||
1 | Mr. Dummer is the financial expert on the Audit Committee. |
ITEM 9. | MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS |
Dividend | ||||||||||||
Paid per | ||||||||||||
High | Low | Share | ||||||||||
(per share) | ||||||||||||
2009: | ||||||||||||
First Quarter | $ | 74.59 | $ | 33.74 | $ | 0.77 | ||||||
2008: | ||||||||||||
Fourth quarter | $ | 94.40 | $ | 55.00 | $ | 0.77 | ||||||
Third quarter | 111.76 | 81.68 | 0.77 | |||||||||
Second quarter | 119.65 | 97.50 | 0.77 | |||||||||
First quarter | 133.60 | 100.00 | 0.77 | |||||||||
$ | 3.08 | |||||||||||
2007: | ||||||||||||
Fourth quarter | $ | 145.99 | $ | 109.28 | $ | 0.77 | ||||||
Third quarter | 159.34 | 116.52 | 0.76 | |||||||||
Second quarter | 155.70 | 126.39 | 0.76 | |||||||||
First quarter | 129.85 | 122.04 | 0.76 | |||||||||
$ | 3.05 |
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Number of | ||||||||||||
Securities | Number of securities | |||||||||||
to be issued upon | remaining available for | |||||||||||
exercise of | Weighted-average | future issuance under | ||||||||||
outstanding | exercise price of | equity compensationplans | ||||||||||
options, warrants | outstanding options, | (excluding securities | ||||||||||
Plan category | andrights | warrants and rights(1) | reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders | 0 | 107.44 | 2,385,906 | |||||||||
Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||||||||
Total | 0 | 107.44 | 2,385,906 |
(1) | Based on exercise prices of outstanding stock appreciation rights. |
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• | prior to that date, the corporation’s board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an affiliated shareholder; or |
• | not less than six months after that date, the business combination is approved at a meeting of shareholders duly called for that purpose, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting shares that are not beneficially owned by the affiliated shareholder. |
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• | a breach of the director’s duty of loyalty to us or our stockholders; |
• | an act or omission not in good faith that constitutes a breach of duty or that involves intentional misconduct or a knowing violation of the law; |
• | a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s office; or |
• | an act or omission for which the liability of the director is expressly provided by an applicable statute; |
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152 | ||||
153 | ||||
154 | ||||
155 | ||||
155 | ||||
156 | ||||
Notes to Consolidated Financial Statements | 157 |
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American National Insurance Company:
March 30, 2009
HOUSTON, TEXAS
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(In thousands, except for per share data)
2008 | 2007 | 2006 | ||||||||||
Premiums and Other Revenues | ||||||||||||
Premiums: | ||||||||||||
Life | $ | 299,338 | $ | 315,893 | $ | 327,594 | ||||||
Annuity | 116,248 | 222,748 | 112,455 | |||||||||
Accident & Health | 290,883 | 283,765 | 303,285 | |||||||||
Property & Casualty | 1,182,026 | 1,177,217 | 1,234,300 | |||||||||
Other Policy Revenues | 174,899 | 155,230 | 139,605 | |||||||||
Net Investment Income | 796,177 | 812,969 | 836,017 | |||||||||
Realized gains (losses) on investments | (379,709 | ) | 41,027 | 100,256 | ||||||||
Other Income | 38,779 | 47,224 | 51,107 | |||||||||
Total Revenues | 2,518,641 | 3,056,073 | 3,104,619 | |||||||||
Benefits, Losses and Expenses | ||||||||||||
Policy Benefits | ||||||||||||
Life | 296,078 | 273,750 | 280,203 | |||||||||
Annuity | 142,867 | 249,878 | 135,384 | |||||||||
Accident & Health | 223,055 | 209,840 | 216,775 | |||||||||
Property & Casualty | 939,854 | 818,230 | 881,806 | |||||||||
Interest Credited to Policy Account Balances | 299,833 | 295,894 | 297,551 | |||||||||
Commissions for acquiring and servicing policies | 475,345 | 456,537 | 423,291 | |||||||||
Other Operating Costs and Expenses | 508,800 | 465,140 | 455,937 | |||||||||
Decrease (increase) in deferred policy acquisition costs | (67,439 | ) | (60,442 | ) | 8,385 | |||||||
Total Benefits, Losses and Expenses | 2,818,393 | 2,708,827 | 2,699,332 | |||||||||
Income (loss) from continuing operations before federal income tax, minority interest and equity in earnings of unconsolidated affiliates | (299,752 | ) | 347,246 | 405,287 | ||||||||
Provision (benefit) for Federal Income Taxes | ||||||||||||
Current | (34,642 | ) | 80,324 | 119,255 | ||||||||
Deferred | (87,388 | ) | 25,539 | 10,584 | ||||||||
Minority Interest in income (loss) of consolidated subsidiaries | 31 | 482 | (1,300 | ) | ||||||||
Equity in earnings of unconsolidated affiliates | 4,965 | 3,866 | 4,693 | |||||||||
Income (loss) from continuing operations | (172,726 | ) | 245,731 | 278,841 | ||||||||
Income (loss) from discontinued operations | 18,728 | (4,958 | ) | (5,610 | ) | |||||||
Net Income (loss) | $ | (153,998 | ) | $ | 240,773 | $ | 273,231 | |||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | (5.82 | ) | $ | 9.09 | $ | 10.32 | |||||
Diluted | $ | (5.82 | ) | $ | 9.04 | $ | 10.27 | |||||
Weighted average common shares outstanding | 26,479,832 | 26,479,832 | 26,479,832 | |||||||||
Weighted average common shares outstanding and dilutive potential common shares | 26,617,457 | 26,638,219 | 26,612,464 | |||||||||
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(In thousands)
December 31, | ||||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Investments, other than investments in unconsolidated affiliates | ||||||||
Fixed Securities: | ||||||||
Bonds held-to-maturity, at amortized cost | $ | 6,681,837 | $ | 6,692,447 | ||||
Bonds available-for-sale, at market | 3,820,837 | 3,837,988 | ||||||
Preferred stocks, at market | 48,822 | 78,885 | ||||||
Equity securities: | ||||||||
Common stocks, at market | 853,530 | 1,194,982 | ||||||
Mortgage loans on real estate | 1,877,053 | 1,540,081 | ||||||
Policy loans | 354,398 | 346,002 | ||||||
Investment real estate, net of accumulated depreciation of $191,435 and $173,520 | 528,905 | 477,458 | ||||||
Short-term investments | 295,170 | 698,262 | ||||||
Other invested assets | 85,151 | 89,791 | ||||||
Total invested assets | 14,545,703 | 14,955,896 | ||||||
Cash | 66,096 | 134,069 | ||||||
Investments in unconsolidated affiliates | 154,309 | 119,856 | ||||||
Accrued investment income | 184,801 | 182,849 | ||||||
Reinsurance ceded receivables | 482,846 | 438,066 | ||||||
Prepaid reinsurance premiums | 61,433 | 66,772 | ||||||
Premiums due and other receivables | 325,019 | 286,600 | ||||||
Deferred policy acquisition costs | 1,482,664 | 1,251,285 | ||||||
Property and equipment, net | 92,458 | 84,403 | ||||||
Current federal income taxes | 68,327 | 3,145 | ||||||
Deferred federal income taxes | 195,508 | — | ||||||
Other assets | 159,254 | 156,787 | ||||||
Separate account assets | 561,021 | 781,160 | ||||||
Total assets | $ | 18,379,439 | $ | 18,460,888 | ||||
LIABILITIES | ||||||||
Policyholder funds | ||||||||
Future policy benefits: | ||||||||
Life | $ | 2,436,001 | $ | 2,384,818 | ||||
Annuity | 664,136 | 654,595 | ||||||
Accident and health | 96,548 | 94,072 | ||||||
Policy account balances | 8,295,527 | 7,636,617 | ||||||
Policy and contract claims | 1,401,960 | 1,335,742 | ||||||
Participating policyholder share | 149,970 | 172,206 | ||||||
Other policyholder funds | 959,134 | 977,408 | ||||||
Total policyholder liabilities | 14,003,276 | 13,255,458 | ||||||
Deferred federal income taxes | — | 96,104 | ||||||
Liability for Retirement Benefits | 184,124 | 125,664 | ||||||
Notes payable | 111,922 | 128,799 | ||||||
Other liabilities | 376,863 | 332,380 | ||||||
Minority interests in subsidiaries | 8,377 | 4,539 | ||||||
Separate account liabilities | 561,021 | 781,160 | ||||||
Total liabilities | 15,245,583 | 14,724,104 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $1.00 par value, — Authorized 50,000,000 Issued 30,832,449, Outstanding 26,818,833 shares | 30,832 | 30,832 | ||||||
Additional paid-in capital | 7,552 | 6,080 | ||||||
Accumulated other comprehensive income (loss) | (221,148 | ) | 145,972 | |||||
Retained earnings | 3,414,946 | 3,653,365 | ||||||
Treasury stock, at cost | (98,326 | ) | (99,465 | ) | ||||
Total stockholders’ equity | 3,133,856 | 3,736,784 | ||||||
Total liabilities and stockholders’ equity | $ | 18,379,439 | $ | 18,460,888 | ||||
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(In thousands, except for per share data)
2008 | 2007 | 2006 | ||||||||||
COMMON STOCK | ||||||||||||
Balance at beginning and end of year | 30,832 | 30,832 | 30,832 | |||||||||
ADDITIONAL PAID-IN CAPITAL | ||||||||||||
Balance at beginning of year | 6,080 | 4,160 | 2,212 | |||||||||
Issuance of treasury shares as restricted stock | (1,139 | ) | (79 | ) | — | |||||||
Amortization of restricted stock | 2,611 | 1,999 | 1,948 | |||||||||
Balance at end of year | 7,552 | 6,080 | 4,160 | |||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Balance at beginning of year | 145,972 | 141,869 | 139,024 | |||||||||
Change in unrealized gains on marketable securities, net | (331,828 | ) | 268 | 28,935 | ||||||||
Foreign exchange adjustments | (247 | ) | (17 | ) | 36 | |||||||
Minimum pension liability adjustment | (35,045 | ) | 3,852 | 8,497 | ||||||||
Effect of FAS158 implementation on pension liability, net of tax | — | — | (34,623 | ) | ||||||||
Balance at end of year | (221,148 | ) | 145,972 | 141,869 | ||||||||
RETAINED EARNINGS | ||||||||||||
Balance at beginning of year | 3,653,365 | 3,498,306 | 3,305,523 | |||||||||
Net income (loss) | (153,998 | ) | 240,773 | 273,231 | ||||||||
Cash dividends to common stockholders ($3.08, $3.05 and $3.01 per share) | (82,651 | ) | (81,531 | ) | (80,448 | ) | ||||||
FIN 48 Implementation | — | (4,183 | ) | — | ||||||||
Effect of FAS 158 Change in Measurement Date | (1,770 | ) | ||||||||||
Balance at end of year | 3,414,946 | 3,653,365 | 3,498,306 | |||||||||
TREASURY STOCK | ||||||||||||
Balance at beginning of year | (99,465 | ) | (99,544 | ) | (99,544 | ) | ||||||
Issuance of restricted stock | 1,139 | 79 | — | |||||||||
Balance at end of year | (98,326 | ) | (99,465 | ) | (99,544 | ) | ||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
Balance at end of year | 3,133,856 | 3,736,784 | 3,575,623 | |||||||||
(In thousands)
2008 | 2007 | 2006 | ||||||||||
Net Income (loss) | (153,998 | ) | 240,773 | 273,231 | ||||||||
Other comprehensive income (loss) | ||||||||||||
Change in unrealized gains on marketable securities, net | (331,828 | ) | 268 | 28,935 | ||||||||
Foreign exchange adjustments | (247 | ) | (17 | ) | 36 | |||||||
Minimum pension liability adjustment | (35,045 | ) | 3,852 | 8,497 | ||||||||
Total Other comprehensive income (loss) | (367,120 | ) | 4,103 | 37,468 | ||||||||
Total comprehensive income | (521,118 | ) | 244,876 | 310,699 | ||||||||
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(In thousands)
2008 | 2007 | 2006 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income (loss) | $ | (153,998 | ) | $ | 240,773 | $ | 273,231 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Realized losses (gains) on investments | 379,709 | (46,499 | ) | (100,295 | ) | |||||||
Amortization of discounts and premiums on bonds | 16,654 | 15,619 | 983 | |||||||||
Capitalized interest on policy loans and mortgage loans | 3,511 | 0 | 0 | |||||||||
Depreciation | 26,496 | 35,327 | 38,146 | |||||||||
Interest credited to policy account balances | 299,833 | 295,894 | 297,551 | |||||||||
Charges to policy account balances | (191,238 | ) | (146,555 | ) | (137,802 | ) | ||||||
Deferred federal income tax (benefit) expense | (87,388 | ) | 25,539 | 10,584 | ||||||||
Deferral of policy acquisition costs | (491,342 | ) | (465,362 | ) | (411,141 | ) | ||||||
Amortization of deferred policy acquisition costs | 424,005 | 405,024 | 419,642 | |||||||||
Equity in earnings of unconsolidated affiliates | (7,639 | ) | (5,947 | ) | (7,220 | ) | ||||||
Changes in: | ||||||||||||
Policyholder funds liabilities | 88,908 | 72,663 | 94,998 | |||||||||
Reinsurance ceded receivables | (44,780 | ) | 30,549 | 25,320 | ||||||||
Premiums due and other receivables | (38,419 | ) | 9,552 | (17,082 | ) | |||||||
Accrued investment income | (1,952 | ) | (8,562 | ) | 11,523 | |||||||
Current federal income tax recoverable | (65,182 | ) | 0 | 0 | ||||||||
Liability for retirement benefits | 6,018 | 5,963 | 22,774 | |||||||||
Prepaid reinsurance premiums | 5,339 | 9,298 | 445 | |||||||||
Other, net | 3,146 | (10,363 | ) | (18,164 | ) | |||||||
Net cash provided by operating activities | 171,681 | 462,913 | 503,493 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Proceeds from sales of: | ||||||||||||
Bonds available-for-sale | 104,093 | 68,004 | 72,252 | |||||||||
Stocks | 129,270 | 277,429 | 191,001 | |||||||||
Real estate | 0 | 84,744 | 153,101 | |||||||||
Mortgage loans | 6,794 | 0 | 0 | |||||||||
Other invested assets | 9,896 | 104,743 | 94,562 | |||||||||
Proceeds from maturity of: | ||||||||||||
Bonds available-for-sale | 249,769 | 287,559 | 338,598 | |||||||||
Bonds held-to-maturity | 528,781 | 547,416 | 640,787 | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 138,035 | 223,956 | 157,474 | |||||||||
Policy loans | 9,459 | 5,472 | 13,085 | |||||||||
Purchases of investments: | ||||||||||||
Bonds available-for-sale | (640,403 | ) | (658,731 | ) | (496,858 | ) | ||||||
Bonds held-to-maturity | (656,580 | ) | (483,722 | ) | (151,883 | ) | ||||||
Stocks | (290,979 | ) | (364,352 | ) | (228,292 | ) | ||||||
Real estate | (78,119 | ) | (46,295 | ) | (2,157 | ) | ||||||
Mortgage loans | (513,964 | ) | (386,137 | ) | (323,207 | ) | ||||||
Policy loans | (20,447 | ) | (10,237 | ) | (20,589 | ) | ||||||
Other invested assets | (21,795 | ) | (50,115 | ) | (22,294 | ) | ||||||
Decrease (increase) in short-term investments, net | 403,092 | 19,881 | (558,578 | ) | ||||||||
Decrease (increase) in investment in unconsolidated affiliates, net | (34,453 | ) | (44,826 | ) | 915 | |||||||
Increase in property and equipment, net | (12,890 | ) | (11,459 | ) | (6,752 | ) | ||||||
Net cash used in investing activities | (690,441 | ) | (436,670 | ) | (148,836 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Policyholders’ deposits to policy account balances | 1,996,836 | 1,220,022 | 1,091,608 | |||||||||
Policyholders’ withdrawals from policy account balances | (1,446,521 | ) | (1,250,266 | ) | (1,195,408 | ) | ||||||
Increase (decrease) in notes payable | (16,877 | ) | 4,724 | (14,959 | ) | |||||||
Dividends to stockholders | (82,651 | ) | (81,531 | ) | (80,448 | ) | ||||||
Net cash provided by (used in) financing activities | 450,787 | (107,051 | ) | (199,207 | ) | |||||||
NET INCREASE (DECREASE) IN CASH | (67,973 | ) | (80,808 | ) | 155,450 | |||||||
Cash: | ||||||||||||
Beginning of the year | 134,069 | 214,877 | 59,427 | |||||||||
End of the year | $ | 66,096 | $ | 134,069 | $ | 214,877 | ||||||
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(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
• | Other-Than-Temporary impairment of investment securities; |
• | Deferred acquisition costs; |
• | Reserves; |
• | Reinsurance recoverable; |
• | Pension and postretirement benefit plans; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31, 2008 | ||||||||||||||||
Debt Securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. Government and agencies | 166,010 | 2,292 | (3 | ) | 168,299 | |||||||||||
States and political subdivisions | 157,907 | 4,662 | (1,611 | ) | 160,958 | |||||||||||
Foreign governments | 4,338 | 1,618 | — | 5,956 | ||||||||||||
Public utilities | 380,766 | 1,218 | (25,877 | ) | 356,107 | |||||||||||
All other corporate bonds | 5,173,926 | 47,954 | (507,577 | ) | 4,714,303 | |||||||||||
Other | 30,130 | — | (4,932 | ) | 25,198 | |||||||||||
Mortgage-backed securities | 768,760 | 13,499 | (64,377 | ) | 717,882 | |||||||||||
Total held-to-maturity | 6,681,837 | 71,243 | (604,377 | ) | 6,148,703 | |||||||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. Government and agencies | 8,027 | 1,063 | — | 9,090 | ||||||||||||
States and political subdivisions | 584,268 | 6,278 | (18,311 | ) | 572,235 | |||||||||||
Foreign governments | 916 | — | (87 | ) | 829 | |||||||||||
Public utilities | 206,499 | 7,222 | (9,791 | ) | 203,930 | |||||||||||
All other corporate bonds | 3,023,131 | 24,014 | (435,847 | ) | 2,611,298 | |||||||||||
Other | 100 | 2 | — | 102 | ||||||||||||
Mortgage-backed securities | 436,619 | 4,475 | (17,741 | ) | 423,353 | |||||||||||
Total available-for-sale | 4,259,560 | 43,054 | (481,777 | ) | 3,820,837 | |||||||||||
Total debt securities | 10,941,397 | 114,297 | (1,086,154 | ) | 9,969,540 | |||||||||||
Marketable equity securities | ||||||||||||||||
Preferred stock | 60,718 | 3,609 | (15,505 | ) | 48,822 | |||||||||||
Common stock | 820,908 | 115,692 | (83,070 | ) | 853,530 | |||||||||||
Total marketable equity securities | 881,626 | 119,301 | (98,575 | ) | 902,352 | |||||||||||
Total investments in securities | 11,823,023 | 233,598 | (1,184,729 | ) | 10,871,892 | |||||||||||
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Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31,2007 | ||||||||||||||||
Debt Securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. Government and agencies | 219,804 | 1,444 | (312 | ) | 220,936 | |||||||||||
States and political subdivisions | 228,122 | 4,052 | (469 | ) | 231,705 | |||||||||||
Foreign governments | 5,868 | 664 | — | 6,532 | ||||||||||||
Public utilities | 411,353 | 5,985 | (4,457 | ) | 412,881 | |||||||||||
All other corporate bonds | 5,122,513 | 89,488 | (96,508 | ) | 5,115,493 | |||||||||||
Mortgage-backed securities | 704,787 | 4,542 | (11,703 | ) | 697,626 | |||||||||||
Total held-to-maturity | 6,692,447 | 106,175 | (113,449 | ) | 6,685,173 | |||||||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. Government and agencies | 30,616 | 501 | — | 31,117 | ||||||||||||
States and political subdivisions | 416,425 | 3,830 | (512 | ) | 419,743 | |||||||||||
Foreign governments | 800 | — | (23 | ) | 777 | |||||||||||
Public utilities | 192,333 | 8,714 | (1,604 | ) | 199,443 | |||||||||||
All other corporate bonds | 2,784,555 | 35,486 | (83,992 | ) | 2,736,049 | |||||||||||
Mortgage-backed securities | 458,553 | 2,966 | (10,660 | ) | 450,859 | |||||||||||
Total available-for-sale | 3,883,282 | 51,497 | (96,791 | ) | 3,837,988 | |||||||||||
Total debt securities | 10,575,729 | 157,672 | (210,240 | ) | 10,523,161 | |||||||||||
Marketable equity securities | ||||||||||||||||
Preferred stock | 87,422 | 1,742 | (10,279 | ) | 78,885 | |||||||||||
Common stock | 866,371 | 375,402 | (46,791 | ) | 1,194,982 | |||||||||||
Total marketable equity securities | 953,793 | 377,144 | (57,070 | ) | 1,273,867 | |||||||||||
Total investments in securities | 11,529,522 | 534,816 | (267,310 | ) | 11,797,028 | |||||||||||
Bonds Held-to-Maturity | Bonds Available-for-Sale | |||||||||||||||
Amortized | Estimated Fair | Amortized | Estimated Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
Due in one year or less | 335,885 | 334,044 | 154,877 | 153,727 | ||||||||||||
Due after one year through five years | 2,880,344 | 2,674,238 | 1,359,792 | 1,237,037 | ||||||||||||
Due after five years through ten years | 2,722,138 | 2,436,099 | 2,012,462 | 1,733,270 | ||||||||||||
Due after ten years | 737,619 | 700,052 | 722,153 | 689,786 | ||||||||||||
$ | 6,675,986 | $ | 6,144,433 | $ | 4,249,284 | $ | 3,813,820 | |||||||||
Without single maturity date | 5,851 | 4,270 | 10,276 | 7,017 | ||||||||||||
Total | $ | 6,681,837 | $ | 6,148,703 | $ | 4,259,560 | $ | 3,820,837 | ||||||||
2008 | 2007 | 2006 | ||||||||||
Proceeds from sales of available-for-sale securities | $ | 118,905 | $ | 166,493 | $ | 425,033 | ||||||
Gross gains realized | 22,478 | 34,033 | 73,541 | |||||||||
Gross losses realized | 30,388 | 2,069 | 8,040 |
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2008 | 2007 | 2006 | ||||||||||
Bonds available-for-sale | (393,429 | ) | (4,443 | ) | (38,062 | ) | ||||||
Preferred stocks | (3,359 | ) | (9,544 | ) | 150 | |||||||
Common stocks | (295,988 | ) | 11,161 | 70,520 | ||||||||
Amortization of deferred policy acquisition costs | 164,937 | 3,080 | 13,675 | |||||||||
(527,839 | ) | 254 | 46,283 | |||||||||
Provision for federal income taxes | 185,273 | (130 | ) | (16,189 | ) | |||||||
(342,566 | ) | 124 | 30,094 | |||||||||
Change in unrealized gains of investments attributable to participating policyholders’ interest | 10,738 | 144 | (1,159 | ) | ||||||||
Total | (331,828 | ) | 268 | 28,935 | ||||||||
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Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
December 31, 2008 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt Securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
U.S. Government and agencies | 3 | 3,181 | — | — | 3 | 3,181 | ||||||||||||||||||
States and political subdivisions | 1,571 | 21,104 | 40 | 383 | 1,611 | 21,487 | ||||||||||||||||||
Public utilities | 13,951 | 249,289 | 11,926 | 67,505 | 25,877 | 316,794 | ||||||||||||||||||
All other corporate bonds | 267,069 | 2,443,246 | 240,508 | 860,680 | 507,577 | 3,303,926 | ||||||||||||||||||
Other | 4,932 | 25,197 | — | — | 4,932 | 25,197 | ||||||||||||||||||
Mortgage-backed securities | 51,899 | 173,371 | 12,478 | 74,270 | 64,377 | 247,641 | ||||||||||||||||||
Total bonds held-to-maturity | 339,425 | 2,915,388 | 264,952 | 1,002,838 | 604,377 | 3,918,226 | ||||||||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
States and political subdivisions | 14,285 | 269,042 | 4,026 | 34,572 | 18,311 | 303,614 | ||||||||||||||||||
Foreign governments | 19 | 107 | 67 | 723 | 87 | 830 | ||||||||||||||||||
Public utilities | 5,052 | 80,772 | 4,739 | 46,342 | 9,791 | 127,114 | ||||||||||||||||||
All other corporate bonds | 245,231 | 1,618,374 | 190,616 | 610,305 | 435,847 | 2,228,679 | ||||||||||||||||||
Mortgage-backed securities | 9,847 | 111,517 | 7,895 | 46,536 | 17,741 | 158,053 | ||||||||||||||||||
Total bonds available-for-sale | 274,434 | 2,079,812 | 207,343 | 738,478 | 481,777 | 2,818,290 | ||||||||||||||||||
Total debt securities | 613,859 | 4,995,200 | 472,295 | 1,741,316 | 1,086,154 | 6,736,516 | ||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Preferred stock | 1,238 | 7,853 | 14,267 | 31,835 | 15,505 | 39,688 | ||||||||||||||||||
Common stock | 77,791 | 299,512 | 5,279 | 18,493 | 83,070 | 318,005 | ||||||||||||||||||
Total marketable securities | 79,029 | 307,365 | 19,546 | 50,328 | 98,575 | 357,693 | ||||||||||||||||||
Total investments in securities | 692,888 | 5,302,565 | 491,841 | 1,791,644 | 1,184,729 | 7,094,209 | ||||||||||||||||||
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
December 31, 2007 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt Securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
U.S. Government and agencies | 110 | 110,254 | 202 | 38,697 | 312 | 148,951 | ||||||||||||||||||
States and political subdivisions | 252 | 217,143 | 217 | 19,208 | 469 | 236,351 | ||||||||||||||||||
Public Utilities | 12 | 17,070 | 4,445 | 185,592 | 4,457 | 202,662 | ||||||||||||||||||
All other corporate bonds | 12,911 | 262,789 | 83,597 | 2,612,728 | 96,508 | 2,875,517 | ||||||||||||||||||
Mortgage-backed securities | 813 | 66,636 | 10,890 | 478,611 | 11,703 | 545,247 | ||||||||||||||||||
Total bonds held-to-maturity | 14,098 | 673,892 | 99,351 | 3,334,836 | 113,449 | 4,008,728 | ||||||||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
U.S. Government and agencies | — | 8,053 | — | — | — | 8,053 | ||||||||||||||||||
States and political subdivisions | 336 | 366,116 | 176 | 38,309 | 512 | 404,425 | ||||||||||||||||||
Foreign governments | — | — | 23 | 777 | 23 | 777 | ||||||||||||||||||
Public utilities | (1,953 | ) | 4,604 | 3,557 | 129,595 | 1,604 | 134,199 | |||||||||||||||||
All other corporate bonds | 7,728 | 164,151 | 76,264 | 1,469,709 | 83,992 | 1,633,860 | ||||||||||||||||||
Mortgage-backed securities | 185 | 1,381,105 | 10,475 | 338,970 | 10,660 | 1,720,075 | ||||||||||||||||||
Total bonds available-for-sale | 6,296 | 1,924,029 | 90,495 | 1,977,360 | 96,791 | 3,901,389 | ||||||||||||||||||
Total debt securities | 20,394 | 2,597,921 | 189,846 | 5,312,196 | 210,240 | 7,910,117 | ||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Preferred stock | 10,279 | 64,223 | — | — | 10,279 | 64,223 | ||||||||||||||||||
Common stock | 46,791 | 472,595 | — | — | 46,791 | 472,595 | ||||||||||||||||||
Total marketable securities | 57,070 | 536,818 | — | — | 57,070 | 536,818 | ||||||||||||||||||
Total investments in securities | 77,464 | 3,134,739 | 189,846 | 5,312,196 | 267,310 | 8,446,935 | ||||||||||||||||||
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Investment Income | Gains (Losses) on Investments | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
Bonds | 623,356 | 620,035 | 610,268 | (157,272 | ) | 366 | 3,192 | |||||||||||||||||
Preferred stocks | 5,687 | 4,561 | 3,356 | (49,172 | ) | — | (6 | ) | ||||||||||||||||
Common stocks | 28,977 | 27,002 | 28,641 | (164,407 | ) | 23,913 | 62,872 | |||||||||||||||||
Mortgage loans | 118,067 | 103,627 | 104,052 | — | — | — | ||||||||||||||||||
Real estate | 114,198 | 126,926 | 151,099 | 1,005 | 18,563 | 26,888 | ||||||||||||||||||
Other invested assets | 12,123 | 40,994 | 56,386 | (5,977 | ) | (40 | ) | 53 | ||||||||||||||||
Investment in unconsolidated affiliates | — | — | — | — | — | — | ||||||||||||||||||
902,408 | 923,145 | 953,802 | (375,823 | ) | 42,802 | 92,999 | ||||||||||||||||||
Investment expenses | (106,231 | ) | (110,176 | ) | (117,785 | ) | — | — | — | |||||||||||||||
Decrease (increase) in valuation allowances | — | — | — | (3,886 | ) | (1,775 | ) | 7,257 | ||||||||||||||||
796,177 | 812,969 | 836,017 | (379,709 | ) | 41,027 | 100,256 | ||||||||||||||||||
2008 | 2007 | |||||||
AAA | 16 | % | 20 | % | ||||
AA | 10 | % | 10 | % | ||||
A | 40 | % | 36 | % | ||||
BBB | 29 | % | 29 | % | ||||
BB | 2 | % | 2 | % | ||||
Below BB | 3 | % | 3 | % | ||||
100 | % | 100 | % | |||||
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2008 | 2007 | |||||||
Consumer Goods | 20 | % | 19 | % | ||||
Financials | 16 | % | 24 | % | ||||
Energy & Utilities | 13 | % | 13 | % | ||||
Information Technology | 13 | % | 13 | % | ||||
Health Care | 13 | % | 11 | % | ||||
Mutual Funds | 10 | % | 6 | % | ||||
Industrials | 8 | % | 8 | % | ||||
Communications | 5 | % | 3 | % | ||||
Materials | 2 | % | 3 | % | ||||
100 | % | 100 | % | |||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Office Buildings | 30 | % | 25 | % | 18 | % | 20 | % | ||||||||
Industrial | 25 | % | 24 | % | 45 | % | 43 | % | ||||||||
Shopping Centers | 21 | % | 24 | % | 23 | % | 23 | % | ||||||||
Hotels/Motels | 17 | % | 15 | % | 2 | % | 2 | % | ||||||||
Other | 4 | % | 3 | % | 11 | % | 11 | % | ||||||||
Commercial | 3 | % | 9 | % | 1 | % | 1 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
West South Central | 22 | % | 23 | % | 64 | % | 60 | % | ||||||||
East North Central | 22 | % | 15 | % | 6 | % | 6 | % | ||||||||
South Atlantic | 17 | % | 16 | % | 16 | % | 17 | % | ||||||||
Pacific | 13 | % | 16 | % | 2 | % | 3 | % | ||||||||
Middle Atlantic | 10 | % | 11 | % | — | — | ||||||||||
Mountain | 5 | % | 5 | % | 1 | % | 1 | % | ||||||||
New England | 5 | % | 7 | % | — | — | ||||||||||
East South Central | 4 | % | 4 | % | 10 | % | 11 | % | ||||||||
West North Central | 2 | % | 3 | % | 1 | % | 2 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
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December 31, 2008 | December 31, 2007 | |||||||||||||||
Estimated Fair | Estimated Fair | |||||||||||||||
Carrying Amount | Value | Carrying Amount | Value | |||||||||||||
Financial Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Held-to-maturity | $ | 6,681,837 | $ | 6,148,703 | $ | 6,692,447 | $ | 6,685,173 | ||||||||
Available-for-Sale | 3,820,837 | 3,820,837 | 3,837,988 | 3,837,988 | ||||||||||||
Preferred Stock | 48,822 | 48,822 | 78,885 | 78,885 | ||||||||||||
Common Stock | 853,530 | 853,530 | 1,194,982 | 1,194,982 | ||||||||||||
Options | 6,157 | 6,157 | 23,071 | 23,071 | ||||||||||||
Mortgage Loans on real estate | 1,877,053 | 1,891,895 | 1,540,081 | 1,549,488 | ||||||||||||
Policy Loans | 354,398 | 354,398 | 346,002 | 346,002 | ||||||||||||
Short-term Investments | 295,170 | 295,170 | 698,262 | 698,262 | ||||||||||||
Financial Liabilities: | ||||||||||||||||
Investment contracts | 6,626,561 | 6,626,561 | 5,927,300 | 5,927,300 | ||||||||||||
Liability for embedded derivatives of equity indexed annuties | 6,208 | 6,208 | 22,758 | 22,758 | ||||||||||||
Notes Payable | 111,922 | 111,922 | 128,799 | 128,799 |
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. American National defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | |||
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect American National’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
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Fair Value Measurement at December 31, 2008 | ||||||||||||||||
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Fair Value at | Markets for | Observable | Unobservable | |||||||||||||
December 31, | Identical Assets | Inputs | Inputs | |||||||||||||
2008 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial Assets: | ||||||||||||||||
Bonds | $ | 9,969,539 | $ | — | $ | 9,900,796 | $ | 68,743 | ||||||||
Preferred stocks | 48,822 | 33,366 | — | 15,456 | ||||||||||||
Common stocks | 853,530 | 853,530 | — | — | ||||||||||||
Options | 6,157 | — | — | 6,157 | ||||||||||||
Short-term investments | 295,170 | — | 295,170 | — | ||||||||||||
Mortgage Loans | 1,891,895 | — | 1,891,895 | — | ||||||||||||
Total | $ | 13,065,113 | $ | 886,896 | $ | 12,087,861 | $ | 90,356 | ||||||||
Financial Liabilities: | ||||||||||||||||
Liability for embedded derivatives of equity indexed annuities | $ | 6,208 | — | — | $ | 6,208 | ||||||||||
Fair Value Measurements Using Significant | ||||
Unobservable Inputs | ||||
Level 3 Totals | ||||
Beginning Balance | $ | 98,519 | ||
Net losses included in other comprehensive income (loss) | (30,658 | ) | ||
Net fair value change for derivatives included in net income (loss) | (11,932 | ) | ||
Purchases, sales, and settlements of derivatives (net) | 11,568 | |||
Transfers into Level 3 | 16,651 | |||
Ending balance | 84,148 | |||
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Fair Value | ||||||||||||||||
at | ||||||||||||||||
December | ||||||||||||||||
31, 2008 | Level 1 | Level 2 | Level 3 | |||||||||||||
Bonds held-to-maturity | $ | 24,035 | $ | — | $ | 24,035 | $ | — | ||||||||
Mortgage Loans | 3,743 | — | 3,743 | — | ||||||||||||
Total | 27,778 | — | 27,778 | — | ||||||||||||
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Life | Accident | Property & | ||||||||||||||
& Annuity | & Health | Casualty | Total | |||||||||||||
Balance at December 31, 2005 | $ | 975,193 | $ | 91,796 | $ | 115,724 | $ | 1,182,713 | ||||||||
Additions | 151,023 | 16,799 | 243,319 | 411,141 | ||||||||||||
Amortization | (158,848 | ) | (22,929 | ) | (237,865 | ) | (419,642 | ) | ||||||||
Effect of change in unrealized gains on available-for-sale securities | 13,675 | — | — | 13,675 | ||||||||||||
Net change | 5,850 | (6,130 | ) | 5,454 | 5,174 | |||||||||||
Foreign exchange effect | (8 | ) | — | — | (8 | ) | ||||||||||
Balance at December 31, 2006 | $ | 981,035 | $ | 85,666 | $ | 121,178 | $ | 1,187,879 | ||||||||
Additions | 216,660 | 18,735 | 232,138 | 467,533 | ||||||||||||
Amortization | (156,017 | ) | (24,508 | ) | (224,499 | ) | (405,024 | ) | ||||||||
Effect of change in unrealized gains on available-for-sale securities | 3,080 | — | — | 3,080 | ||||||||||||
Net change | 63,723 | (5,773 | ) | 7,639 | 65,589 | |||||||||||
Acquisitions | (2,170 | ) | — | — | (2,170 | ) | ||||||||||
Foreign exchange effect | (13 | ) | — | — | (13 | ) | ||||||||||
Balance at December 31, 2007 | $ | 1,042,575 | $ | 79,893 | $ | 128,817 | $ | 1,251,285 | ||||||||
Additions | 225,575 | 22,762 | 243,005 | 491,342 | ||||||||||||
Amortization | (162,884 | ) | (27,785 | ) | (233,336 | ) | (424,005 | ) | ||||||||
Effect of change in unrealized gains on available-for-sale securities | 164,937 | — | — | 164,937 | ||||||||||||
Net change | 227,628 | (5,023 | ) | 9,669 | 232,274 | |||||||||||
Acquisitions | (729 | ) | — | — | (729 | ) | ||||||||||
Foreign exchange effect | (166 | ) | — | — | (166 | ) | ||||||||||
Balance at December 31, 2008 | $ | 1,269,308 | $ | 74,870 | $ | 138,486 | $ | 1,482,664 | ||||||||
2008 Premiums | $ | 415,586 | $ | 290,883 | $ | 1,182,026 | $ | 1,888,495 | ||||||||
2007 Premiums | $ | 538,641 | $ | 283,765 | $ | 1,177,217 | $ | 1,999,623 | ||||||||
2006 Premiums | $ | 440,049 | $ | 303,285 | $ | 1,234,300 | $ | 1,977,634 | ||||||||
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2008 | 2007 | 2006 | ||||||||||
Balance at January 1 | $ | 1,256,698 | $ | 1,308,603 | $ | 1,359,452 | ||||||
Less reinsurance recoverables | 363,140 | 421,737 | 454,872 | |||||||||
Net beginning balance | 893,558 | 886,866 | 904,580 | |||||||||
Incurred related to: | ||||||||||||
Current year | 1,158,452 | 1,073,249 | 1,085,736 | |||||||||
Prior years | (43,045 | ) | (93,524 | ) | (29,238 | ) | ||||||
Total incurred | 1,115,407 | 979,725 | 1,056,498 | |||||||||
Paid related to: | ||||||||||||
Current year | 709,705 | 636,234 | 645,777 | |||||||||
Prior years | 366,680 | 336,799 | 428,435 | |||||||||
Total paid | 1,076,385 | 973,033 | 1,074,212 | |||||||||
Net balance at December 31 | 932,580 | 893,558 | 886,866 | |||||||||
Plus reinsurance recoverables | 377,692 | 363,140 | 421,737 | |||||||||
Balance at December 31 | $ | 1,310,272 | $ | 1,256,698 | $ | 1,308,603 | ||||||
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2008 | 2007 | 2006 | ||||||||||
Direct premiums | $ | 2,117,400 | $ | 2,134,669 | $ | 2,117,722 | ||||||
Reinsurance premiums assumed from other companies | 215,189 | 176,357 | 198,116 | |||||||||
Reinsurance premiums ceded to other companies | (444,094 | ) | (302,650 | ) | (329,108 | ) | ||||||
Net premiums | $ | 1,888,495 | $ | 2,008,376 | $ | 1,986,730 | ||||||
Reinsurance recoveries | $ | 301,397 | $ | 198,553 | $ | 591,731 | ||||||
2008 | 2007 | 2006 | ||||||||||
Direct life insurance in force | $ | 68,820,212 | $ | 67,604,695 | $ | 65,008,408 | ||||||
Reinsurance risks assumed from other companies | 1,050,645 | 1,078,371 | 982,412 | |||||||||
Total life insurance in force | 69,870,857 | 68,683,066 | 65,990,820 | |||||||||
Reinsurance risks ceded to other companies | $ | (31,241,255 | ) | $ | (29,635,648 | ) | $ | (26,557,877 | ) | |||
Net life insurance in force | $ | 38,629,602 | $ | 39,047,418 | $ | 39,432,943 | ||||||
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2008 | 2007 | 2006 | ||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||
Income tax on pre-tax income | $ | (105,021 | ) | (35.0) | % | $ | 121,536 | 35.0 | % | $ | 141,850 | 35.0 | % | |||||||||||
Tax-exempt investment income | (8,791 | ) | (2.9 | ) | (6,360 | ) | (1.8 | ) | (5,187 | ) | (1.3 | ) | ||||||||||||
Dividend exclusion | (12,028 | ) | (4.0 | ) | (6,589 | ) | (1.9 | ) | (7,028 | ) | (1.7 | ) | ||||||||||||
Miscellaneous tax credits, net | (5,835 | ) | (1.9 | ) | (3,862 | ) | (1.1 | ) | (2,284 | ) | (0.5 | ) | ||||||||||||
Foreign operations | — | — | 1,735 | 0.5 | 1,967 | 0.5 | ||||||||||||||||||
Other items, net | 9,645 | 3.1 | (597 | ) | (0.2 | ) | 521 | 0.1 | ||||||||||||||||
$ | (122,030 | ) | (40.7) | % | $ | 105,863 | 30.5 | % | $ | 129,839 | 32.1 | % | ||||||||||||
2008 | 2007 | |||||||
Deferred Tax Assets | ||||||||
Marketable securities, principally due to net unrealized losses | $ | 146,191 | $ | — | ||||
Marketable securities, principally due to impairment losses | 138,487 | 25,661 | ||||||
Investment in real estate and other invested assets, principally due to investment valuation allowances | 1,279 | 9,614 | ||||||
Policyholder funds, principally due to policy reserve discount | 187,277 | 190,778 | ||||||
Policyholder funds, principally due to unearned premium reserve | 30,716 | 31,066 | ||||||
Non-qualified pension | 27,630 | 25,693 | ||||||
Participating policyholders’ surplus | 28,615 | 32,198 | ||||||
Pension | 36,968 | 18,127 | ||||||
Commissions and other expenses | 24,395 | 15,850 | ||||||
Other assets | 8,518 | 3,306 | ||||||
Net deferred tax assets | $ | 630,076 | $ | 352,293 | ||||
Deferred Tax Liabilities | ||||||||
Marketable securities, principally due to net unrealized gains | $ | — | $ | (96,441 | ) | |||
Investment in bonds, principally due to accrual of discount on bonds | (18,221 | ) | (13,395 | ) | ||||
Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods | (410,970 | ) | (332,328 | ) | ||||
Property, plant and equipment, principally due to difference between GAAP and tax depreciation method | (5,377 | ) | (6,233 | ) | ||||
Net deferred tax liabilities | (434,568 | ) | (448,397 | ) | ||||
Total deferred tax | $ | 195,508 | $ | (96,104 | ) | |||
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2008 | ||||
Unrecognized Tax Positions | ||||
Balance at beginning of year | $ | 4,618 | ||
Tax positions related to prior years | — | |||
Current year tax positions | — | |||
Settlements during the year | (3,564 | ) | ||
Lapse in statute of limitations | — | |||
Balance at end of year | $ | 1,054 | ||
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Before | Federal | |||||||||||
Federal | Income Tax | Net of Federal | ||||||||||
Income Tax | Expense | Income Tax | ||||||||||
December 31, 2008 | ||||||||||||
Unrealized losses | $ | (138,311 | ) | $ | (48,409 | ) | $ | (89,902 | ) | |||
Less: reclassification adjustment for net losses realized in net income | (372,194 | ) | (130,268 | ) | (241,926 | ) | ||||||
Net unrealized loss component of comprehensive income | $ | (510,505 | ) | $ | (178,677 | ) | $ | (331,828 | ) | |||
December 31, 2007 | ||||||||||||
Unrealized losses | $ | (20,082 | ) | $ | (7,029 | ) | $ | (13,053 | ) | |||
Less: reclassification adjustment for net gains realized in net income | 20,494 | 7,173 | 13,321 | |||||||||
Net unrealized gain component of comprehensive income | $ | 412 | $ | 144 | $ | 268 | ||||||
December 31, 2006 | ||||||||||||
Unrealized losses | $ | (21,145 | ) | $ | (7,401 | ) | $ | (13,744 | ) | |||
Less: reclassification adjustment for net gains realized in net income | 65,660 | 22,981 | 42,679 | |||||||||
Net unrealized gain component of comprehensive income | $ | 44,515 | $ | 15,580 | $ | 28,935 | ||||||
2008 | 2007 | 2006 | ||||||||||
Common Stock | ||||||||||||
Shares issued | 30,832,449 | 30,832,449 | 30,832,449 | |||||||||
Treasury shares | 4,013,616 | 4,099,617 | 4,105,617 | |||||||||
Restricted shares | 339,001 | 253,000 | 247,000 | |||||||||
Unrestricted outstanding shares | 26,479,832 | 26,479,832 | 26,479,832 | |||||||||
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SAR Weighted- | RS Weighted- | |||||||||||||||
Average Price | Average Price | |||||||||||||||
SAR Shares | per Share | RS Shares | per Share | |||||||||||||
Outstanding at December 31, 2005 | 157,375 | $ | 94.04 | 247,000 | $ | 4.51 | ||||||||||
Granted | 2,500 | 119.25 | — | — | ||||||||||||
Exercised | (22,713 | ) | 90.18 | — | — | |||||||||||
Canceled | (4,463 | ) | 97.81 | — | — | |||||||||||
Outstanding at December 31, 2006 | 132,699 | $ | 95.05 | 247,000 | $ | 4.51 | ||||||||||
Granted | 4,500 | 130.52 | 6,000 | — | ||||||||||||
Exercised | (34,795 | ) | 91.36 | — | — | |||||||||||
Canceled | (5,680 | ) | 98.20 | — | — | |||||||||||
Outstanding at December 31, 2007 | 96,724 | $ | 97.84 | 253,000 | $ | 4.40 | ||||||||||
Granted | 96,917 | 115.92 | 86,001 | — | ||||||||||||
Exercised | (4,109 | ) | 81.30 | — | — | |||||||||||
Canceled | — | — | — | — | ||||||||||||
Outstanding at December 31, 2008 | 189,532 | $ | 107.44 | 339,001 | $ | 3.28 | ||||||||||
2008 | 2007 | 2006 | ||||||||||
Unrestricted shares outstanding | 26,479,832 | 26,479,832 | 26,479,832 | |||||||||
Incremental shares from restricted stock | 137,625 | 158,387 | 132,632 | |||||||||
Total shares for diluted calculations | 26,617,457 | 26,638,219 | 26,612,464 | |||||||||
Diluted earnings (losses) per share | $ | (5.82 | ) | $ | 9.04 | $ | 10.27 | |||||
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• | The Life segment markets whole, term, universal and variable life insurance on a national basis primarily through employee and multiple line agents, direct marketing channels and independent third-party marketing organizations. | ||
• | The Annuity segment develops, sells and supports fixed, equity-indexed, and variable annuity products. These products are primarily sold through independent agents and brokers, but are also sold through financial institutions and multiple line agents. | ||
• | The Health segment’s primary lines of business are Medicare Supplement, medical expense, employer medical stop loss, true group, other supplemental health products and credit disability insurance. Health products are typically distributed through independent agents and Managing General Underwriters. | ||
• | The Property and Casualty segment writes auto, homeowners, agribusiness and credit related property insurance. These products are primarily sold through multiple line agents and independent agents. | ||
• | The Corporate and Other business segment consists of net investment income on the capital not allocated to the insurance lines and the operations of non-insurance lines of business. This segment also provides mutual fund products. |
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• | Net investment income from fixed income assets (bonds and mortgage loans) is allocated based on the funds generated by each line of business at the average yield available from these fixed income assets at the time such funds become available. | ||
• | Net investment income from all other assets is allocated to the operating segments in accordance with the amount of equity invested in each segment, with the remainder going to Corporate and Other. | ||
• | Expenses are allocated to the lines based upon various factors, including premium and commission ratios within the respective operating segments. | ||
• | Realized gains or losses on investments are allocated to Corporate and Other. | ||
• | Equity in earnings of unconsolidated affiliates are allocated to Corporate and Other. | ||
• | Federal income taxes have been applied to the net earnings of each segment based on a fixed tax rate. Any difference between the amount allocated to the segments and the total federal income tax amount is allocated to Corporate and Other. |
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Property & | Corporate & | |||||||||||||||||||||||
2008 | Life | Annuity | Health | Casualty | Other | TOTAL | ||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||
Premiums | $ | 299,338 | $ | 116,248 | $ | 290,883 | $ | 1,182,026 | $ | — | $ | 1,888,495 | ||||||||||||
Other policy revenues | 154,984 | 19,915 | — | — | — | 174,899 | ||||||||||||||||||
Net investment income | 226,643 | 374,023 | 16,566 | 69,348 | 109,597 | 796,177 | ||||||||||||||||||
Other income | 3,767 | (5,718 | ) | 13,252 | 8,973 | 18,505 | 38,779 | |||||||||||||||||
Total operating revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | 128,102 | 2,898,350 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | (379,709 | ) | (379,709 | ) | ||||||||||||||||
Total revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | (251,607 | ) | 2,518,641 | |||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||
Policy benefits | 296,078 | 142,867 | 223,055 | 939,854 | — | 1,601,854 | ||||||||||||||||||
Interest credited to policy account balances | 62,221 | 237,612 | — | — | — | 299,833 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 126,813 | 79,213 | 43,219 | 226,100 | — | 475,345 | ||||||||||||||||||
Other operating costs and expenses | 222,908 | 45,491 | 69,961 | 132,601 | 37,839 | 508,800 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (42,103 | ) | (20,690 | ) | 5,023 | (9,669 | ) | — | (67,439 | ) | ||||||||||||||
Total benefits, losses and expenses | 665,917 | 484,493 | 341,258 | 1,288,886 | 37,839 | 2,818,393 | ||||||||||||||||||
Income before other items and federal income taxes | 18,815 | 19,975 | (20,557 | ) | (28,539 | ) | (289,446 | ) | (299,752 | ) | ||||||||||||||
Benefit (provision) for federal income taxes | (6,209 | ) | (6,592 | ) | 6,784 | 9,418 | 118,629 | 122,030 | ||||||||||||||||
Minority interest in income (loss) of consolidated subsidiaries | — | — | — | — | 31 | 31 | ||||||||||||||||||
Equity in earnings of unconsolidated affiliates | — | — | — | — | 4,965 | 4,965 | ||||||||||||||||||
Income (loss) from continuing operations | 12,606 | 13,383 | (13,773 | ) | (19,121 | ) | (165,821 | ) | (172,726 | ) | ||||||||||||||
Income (loss) from discontinued operations, net of income tax | 18,728 | — | — | — | — | 18,728 | ||||||||||||||||||
Net income (loss) | $ | 31,334 | $ | 13,383 | $ | (13,773 | ) | $ | (19,121 | ) | $ | (165,821 | ) | $ | (153,998 | ) | ||||||||
Selected data: | ||||||||||||||||||||||||
Total assets | $ | 4,823,465 | $ | 8,265,270 | $ | 759,089 | $ | 2,248,514 | $ | 2,283,101 | $ | 18,379,439 | ||||||||||||
Return on equity | 4.36 | % | 2.67 | % | (9.67 | %) | (3.95 | %) | (28.17 | %) | (13.99 | %) |
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Property & | Corporate & | |||||||||||||||||||||||
2007 | Life | Annuity | Health | Casualty | Other | TOTAL | ||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||
Premiums | $ | 315,893 | $ | 222,748 | $ | 283,765 | $ | 1,177,217 | $ | — | $ | 1,999,623 | ||||||||||||
Other policy revenues | 130,744 | 24,486 | — | — | — | 155,230 | ||||||||||||||||||
Net investment income | 229,092 | 364,607 | 16,710 | 75,041 | 127,519 | 812,969 | ||||||||||||||||||
Other income | 3,967 | 345 | 13,048 | 8,623 | 21,241 | 47,224 | ||||||||||||||||||
Total operating revenues | 679,696 | 612,186 | 313,523 | 1,260,881 | 148,760 | 3,015,046 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | 41,027 | 41,027 | ||||||||||||||||||
Total revenues | 679,696 | 612,186 | 313,523 | 1,260,881 | 189,787 | 3,056,073 | ||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||
Policy benefits | 273,750 | 249,878 | 209,840 | 818,230 | — | 1,551,698 | ||||||||||||||||||
Interest credited to policy account balances | 63,289 | 232,605 | — | — | — | 295,894 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 141,517 | 58,635 | 39,342 | 217,043 | — | 456,537 | ||||||||||||||||||
Other operating costs and expenses | 200,361 | 35,030 | 57,975 | 110,705 | 61,069 | 465,140 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (57,666 | ) | (911 | ) | 5,774 | (7,639 | ) | — | (60,442 | ) | ||||||||||||||
Total benefits, losses and expenses | 621,251 | 575,237 | 312,931 | 1,138,339 | 61,069 | 2,708,827 | ||||||||||||||||||
Income before other items and federal income taxes | 58,445 | 36,949 | 592 | 122,542 | 128,718 | 347,246 | ||||||||||||||||||
Benefit (provision) for federal income taxes | (19,287 | ) | (12,193 | ) | (195 | ) | (40,439 | ) | (33,749 | ) | (105,863 | ) | ||||||||||||
Minority interest in income (loss) of consolidated subsidiaries | — | — | — | — | 482 | 482 | ||||||||||||||||||
Equity in earnings of unconsolidated affiliates | — | — | — | — | 3,866 | 3,866 | ||||||||||||||||||
Income (loss) from continuing operations | 39,158 | 24,756 | 397 | 82,103 | 99,317 | 245,731 | ||||||||||||||||||
Income (loss) from discontinued operations, net of income tax | (4,958 | ) | — | — | — | — | (4,958 | ) | ||||||||||||||||
Net income (loss) | $ | 34,200 | $ | 24,756 | $ | 397 | $ | 82,103 | $ | 99,317 | $ | 240,773 | ||||||||||||
Selected data: | ||||||||||||||||||||||||
Total assets | $ | 4,836,221 | $ | 7,464,512 | $ | 752,863 | $ | 2,036,372 | $ | 3,370,920 | $ | 18,460,888 | ||||||||||||
Return on equity | 6.44 | % | 5.29 | % | 0.28 | % | 16.40 | % | 5.81 | % | 6.85 | % |
Property & | Corporate & | |||||||||||||||||||||||
2006 | Life | Annuity | Health | Casualty | Other | TOTAL | ||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||
Premiums | $ | 327,594 | $ | 112,455 | $ | 303,285 | $ | 1,234,300 | $ | — | $ | 1,977,634 | ||||||||||||
Other policy revenues | 115,082 | 24,523 | — | — | — | 139,605 | ||||||||||||||||||
Net investment income | 231,414 | 353,157 | 18,964 | 72,759 | 159,723 | 836,017 | ||||||||||||||||||
Other income | 4,577 | (595 | ) | 17,204 | 7,524 | 22,397 | 51,107 | |||||||||||||||||
Total operating revenues | 678,667 | 489,540 | 339,453 | 1,314,583 | 182,120 | 3,004,363 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | 100,256 | 100,256 | ||||||||||||||||||
Total revenues | 678,667 | 489,540 | 339,453 | 1,314,583 | 282,376 | 3,104,619 | ||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||
Policy benefits | 280,203 | 135,384 | 216,775 | 881,806 | — | 1,514,168 | ||||||||||||||||||
Interest credited to policy account balances | 66,910 | 230,641 | — | — | — | 297,551 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 96,612 | 53,966 | 42,097 | 230,616 | — | 423,291 | ||||||||||||||||||
Other operating costs and expenses | 185,752 | 33,139 | 61,699 | 109,940 | 65,407 | 455,937 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | 4,233 | 3,475 | 6,131 | (5,454 | ) | — | 8,385 | |||||||||||||||||
Total benefits, losses and expenses | 633,710 | 456,605 | 326,702 | 1,216,908 | 65,407 | 2,699,332 | ||||||||||||||||||
Income before other items and federal income taxes | 44,957 | 32,935 | 12,751 | 97,675 | 216,969 | 405,287 | ||||||||||||||||||
Benefit (provision) for federal income taxes | (14,835 | ) | (10,869 | ) | (4,208 | ) | (32,234 | ) | (67,694 | ) | (129,839 | ) | ||||||||||||
Minority interest in income (loss)of consolidated subsidiaries | — | — | — | — | (1,300 | ) | (1,300 | ) | ||||||||||||||||
Equity in earnings of unconsolidated affiliates | — | — | — | — | 4,693 | 4,693 | ||||||||||||||||||
Income (loss) from continuing operations | 30,122 | 22,066 | 8,543 | 65,441 | 152,669 | 278,841 | ||||||||||||||||||
Income (loss) from discontinued operations, net of income tax | (5,610 | ) | — | — | — | — | (5,610 | ) | ||||||||||||||||
Net income (loss) | $ | 24,512 | $ | 22,066 | $ | 8,543 | $ | 65,441 | $ | 152,669 | $ | 273,231 | ||||||||||||
Selected data: | ||||||||||||||||||||||||
Total assets | $ | 4,736,711 | $ | 7,210,400 | $ | 791,052 | $ | 2,064,943 | $ | 3,129,065 | $ | 17,932,171 | ||||||||||||
Return on equity | 5.10 | % | 4.95 | % | 5.08 | % | 13.21 | % | 9.92 | % | 8.17 | % |
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2008 | 2007 | 2006 | ||||||||||
Reconciliation of benefit obligation: | ||||||||||||
Obligation at beginning of year | $ | 302,657 | $ | 283,344 | $ | 277,877 | ||||||
Service cost benefits earned during period | 12,319 | 9,326 | 9,633 | |||||||||
Interest cost on projected benefit obligation | 22,077 | 16,483 | 15,474 | |||||||||
Participant contributions | 746 | 730 | 751 | |||||||||
Actuarial gain (loss) | 6,015 | 8,461 | (6,247 | ) | ||||||||
Benefits paid | (15,031 | ) | (15,687 | ) | (14,144 | ) | ||||||
Obligation at end of year | $ | 328,783 | $ | 302,657 | $ | 283,344 | ||||||
Reconciliation of fair value of plan assets: | ||||||||||||
Fair value of plan assets at beginning of year | $ | 183,018 | $ | 167,478 | $ | 158,141 | ||||||
Actual return on plan assets | (38,552 | ) | 15,979 | 9,231 | ||||||||
Employer contributions | 19,689 | 14,580 | 13,499 | |||||||||
Participant contributions | 746 | 731 | 751 | |||||||||
Benefits paid | (15,027 | ) | (15,750 | ) | (14,144 | ) | ||||||
Fair value of plan assets at end of year | 149,874 | $ | 183,018 | $ | 167,478 | |||||||
Funded status at end of year | $ | (178,909 | ) | $ | (119,639 | ) | $ | (115,866 | ) | |||
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2008 | 2007 | |||||||
Assets | $ | — | — | |||||
Liabilities | (178,909 | ) | (119,639 | ) | ||||
$ | (178,909 | ) | (119,639 | ) | ||||
2008 | 2007 | 2006 | ||||||||||
Service cost | $ | 9,974 | $ | 9,366 | $ | 9,664 | ||||||
Interest cost | 19,003 | 16,483 | 15,474 | |||||||||
Expected return on plan assets | (13,571 | ) | (12,375 | ) | (11,808 | ) | ||||||
Amortization of prior service cost | 3,469 | 3,666 | 4,613 | |||||||||
Amortization of transition obligation | — | 117 | 47 | |||||||||
Amortization of net gain / (loss) | 4,412 | 6,197 | 4,784 | |||||||||
Net periodic benefit cost | $ | 23,287 | $ | 23,454 | $ | 22,774 | ||||||
2008 | 2007 | 2006 | ||||||||||
Prior service cost | $ | 3,469 | $ | 3,711 | $ | (12,973 | ) | |||||
Net actuarial loss | (57,385 | ) | 2,215 | 26,045 | ||||||||
Deferred tax benefit (expense) | 18,871 | (2,074 | ) | (4,575 | ) | |||||||
Other comprehensive income (loss), net of tax | $ | (35,045 | ) | $ | 3,852 | $ | 8,497 | |||||
2008 | 2007 | |||||||
Prior service cost | $ | (5,793 | ) | $ | (9,262 | ) | ||
Net actuarial loss | (100,759 | ) | (43,374 | ) | ||||
Deferred tax benefit | 37,293 | 18,423 | ||||||
Amounts included in accumulated other comprehensive income (loss) | $ | (69,259 | ) | $ | (34,213 | ) | ||
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Pension Benefits | ||||||||
Used for Net | Used for Benefit | |||||||
Benefit Cost in Fiscal Year | Obligations | |||||||
1/1/2008 to 12/31/2008 | as of 12/31/2008 | |||||||
Discount rate | 6.10 | % | 6.17 | % | ||||
Rate of compensation increase | 4.20 | % | 4.20 | % | ||||
Long-term rate of return | 7.65 | % | 7.65 | % |
Year | Pension Benefits | |||
2009 | $ | 17,983 | ||
2010 | 20,997 | |||
2011 | 25,024 | |||
2012 | 24,787 | |||
2013 | 28,593 | |||
2014 – 2018 | 164,030 |
Plan Assets at December 31, | ||||||||
2008 | 2007 | |||||||
Asset category | ||||||||
Equity securities | 33.8 | % | 36.5 | % | ||||
Debt securities | 47.6 | % | 48.0 | % | ||||
Other | 18.6 | % | 15.5 | % | ||||
Total | 100.0 | % | 100.0 | % | ||||
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Amount as of | ||||||
Related Party | Financial Statement Line Impacted | December 31, 2008 | ||||
Gal-Tex Hotel Corporation | Mortgage loans on real estate | 12,735 | ||||
Gal-Tex Hotel Corporation | Investment income | 956 | ||||
Gal-Tex Hotel Corporation | Other operating costs & expenses | 406 | ||||
Gal-Tex Hotel Corporation | Accident and health premiums | 56 | ||||
Moody Insurance Group, Inc. | Commissions | 2,424 | ||||
Moody Insurance Group, Inc. | Other operating costs & expenses | 223 | ||||
National Western Ins. Co. | Accident and health premiums | 245 | ||||
National Western Ins. Co. | Other operating costs & expenses | 1,174 | ||||
Moody Foundation | Accident and health premiums | 108 | ||||
Greer, Herz & Adams, LLP | Other operating costs & expenses | 7,787 |
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196 | ||||
197 | ||||
197 | ||||
198 | ||||
199 |
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
Premiums and Other Revenues | ||||||||
Premiums: | ||||||||
Life | $ | 70,090 | $ | 74,155 | ||||
Annuity | 37,216 | 44,299 | ||||||
Accident and health | 79,922 | 72,037 | ||||||
Property and casualty | 292,489 | 300,106 | ||||||
Other policy revenues | 43,680 | 42,066 | ||||||
Net investment income | 193,196 | 187,588 | ||||||
Realized gains (losses) on investments | (73,461 | ) | (5,585 | ) | ||||
Other income | 8,865 | 9,413 | ||||||
Total Revenues | 651,997 | 724,079 | ||||||
Benefits, Losses and Expenses | ||||||||
Policy Benefits | ||||||||
Life | 73,949 | 71,966 | ||||||
Annuity | 43,657 | 49,750 | ||||||
Accident and health | 64,067 | 60,579 | ||||||
Property and casualty | 248,074 | 217,611 | ||||||
Interest credited to policy account balances | 81,588 | 67,147 | ||||||
Commissions for acquiring and servicing policies | 112,915 | 125,270 | ||||||
Other operating costs and expenses | 111,160 | 117,545 | ||||||
Decrease (increase) in deferred policy acquisition costs | (6,633 | ) | (28,731 | ) | ||||
Total benefits, losses and expenses | 728,777 | 681,137 | ||||||
Income (loss) from continuing operations before federal income tax, minority interest and equity in earnings of unconsolidated affiliates | (76,780 | ) | 42,942 | |||||
Provision (benefit) for federal income taxes | ||||||||
Current | (14,775 | ) | 10,353 | |||||
Deferred | (16,248 | ) | (133 | ) | ||||
Total Provision (benefit) for federal income taxes | (31,023 | ) | 10,220 | |||||
Equity in earnings of unconsolidated affiliates, net of tax | (1,937 | ) | 7,648 | |||||
Income (loss) from continuing operations | (47,694 | ) | 40,370 | |||||
Income (loss) from discontinued operations | — | (1,345 | ) | |||||
Net income (loss) | (47,694 | ) | 39,025 | |||||
Less: Net income (loss) attributable to noncontrolling interest | (1 | ) | 0 | |||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | (47,695 | ) | $ | 39,025 | |||
Earnings (loss) per share: | ||||||||
Basic | (1.80 | ) | 1.47 | |||||
Diluted | (1.80 | ) | 1.46 | |||||
Weighted average common shares outstanding | 26,498,832 | 26,479,832 | ||||||
Weighted average common shares outstanding and dilutive potential common shares | 26,606,916 | 26,641,081 |
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March 31, | December 31, | |||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments, other than investments in unconsolidated affiliates | ||||||||
Fixed Securities: | ||||||||
Bonds held-to-maturity, at amortized cost | $ | 6,785,080 | $ | 6,681,837 | ||||
Bonds available-for-sale, at market | 3,864,058 | 3,820,837 | ||||||
Preferred stocks, at market | 49,580 | 48,822 | ||||||
Equity securities: | ||||||||
Common stocks, at market | 740,936 | 853,530 | ||||||
Mortgage loans on real estate | 1,909,598 | 1,877,053 | ||||||
Policy loans | 355,010 | 354,398 | ||||||
Investment real estate, net of accumulated depreciation of $196,571 and $191,435 | 542,799 | 528,905 | ||||||
Short-term investments | 710,895 | 295,170 | ||||||
Other invested assets | 82,119 | 85,151 | ||||||
Total invested assets | 15,040,075 | 14,545,703 | ||||||
Cash | 119,778 | 66,096 | ||||||
Investments in unconsolidated affiliates | 156,520 | 154,309 | ||||||
Accrued investment income | 189,233 | 184,801 | ||||||
Reinsurance ceded receivables | 452,635 | 482,846 | ||||||
Prepaid reinsurance premiums | 47,854 | 61,433 | ||||||
Premiums due and other receivables | 309,981 | 325,019 | ||||||
Deferred policy acquisition costs | 1,459,659 | 1,482,664 | ||||||
Property and equipment, net | 91,450 | 92,458 | ||||||
Current federal income taxes | 90,800 | 68,327 | ||||||
Deferred federal income taxes | 181,172 | 195,508 | ||||||
Other assets | 148,229 | 159,254 | ||||||
Separate account assets | 533,843 | 561,021 | ||||||
Total assets | $ | 18,821,229 | $ | 18,379,439 | ||||
LIABILITIES | ||||||||
Policyholder funds | ||||||||
Future policy benefits: | ||||||||
Life | $ | 2,446,694 | $ | 2,436,001 | ||||
Annuity | 674,562 | 664,136 | ||||||
Accident and health | 96,316 | 96,548 | ||||||
Policy account balances | 8,817,059 | 8,321,688 | ||||||
Policy and contract claims | 1,381,239 | 1,401,960 | ||||||
Participating policyholder share | 146,267 | 149,970 | ||||||
Other policyholder funds | 933,636 | 959,134 | ||||||
Total policyholder liabilities | 14,495,773 | 14,029,437 | ||||||
Liability for Retirement Benefits | 185,697 | 184,124 | ||||||
Notes payable | 111,217 | 111,922 | ||||||
Other liabilities | 435,185 | 350,702 | ||||||
Separate account liabilities | 533,843 | 561,021 | ||||||
Total liabilities | 15,761,715 | 15,237,206 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $1.00 par value, — Authorized 50,000,000 Issued 30,832,449, Outstanding 26,820,166 shares | 30,832 | 30,832 | ||||||
Additional paid-in capital | 9,150 | 7,552 | ||||||
Accumulated other comprehensive income (loss) | (236,211 | ) | (221,148 | ) | ||||
Retained earnings | 3,346,715 | 3,414,946 | ||||||
Treasury stock, at cost | (98,326 | ) | (98,326 | ) | ||||
Total stockholders’ equity | 3,052,160 | 3,133,856 | ||||||
Noncontrolling interest | 7,354 | 8,377 | ||||||
Total equity | 3,059,514 | 3,142,233 | ||||||
Total liabilities and stockholders’ equity | $ | 18,821,229 | $ | 18,379,439 | ||||
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
COMMON STOCK | ||||||||
Balance at beginning and end of year | 30,832 | 30,832 | ||||||
ADDITIONAL PAID-IN CAPITAL | ||||||||
Balance at beginning of year | 7,552 | 6,080 | ||||||
Issuance of treasury shares as restricted stock | 1,598 | — | ||||||
Amortization of restricted stock | — | 507 | ||||||
Balance at end of year | 9,150 | 6,587 | ||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
Balance at beginning of year | (221,148 | ) | 145,972 | |||||
Change in unrealized gains on marketable securities, net | (16,663 | ) | (64,591 | ) | ||||
Foreign exchange adjustments | (110 | ) | 100 | |||||
Minimum pension liability adjustment | 1,710 | (572 | ) | |||||
Balance at end of year | (236,211 | ) | 80,909 | |||||
RETAINED EARNINGS | ||||||||
Balance at beginning of year | 3,414,946 | 3,653,365 | ||||||
Net income (loss) | (47,695 | ) | 39,025 | |||||
Cash dividends to common stockholders ($0.77 and $0.77 per share) | (20,536 | ) | (20,585 | ) | ||||
FIN 48 Implementation | — | — | ||||||
Balance at end of year | 3,346,715 | 3,671,805 | ||||||
TREASURY STOCK | ||||||||
Balance at beginning of year | (98,326 | ) | (99,465 | ) | ||||
Net issuance of restricted stock | — | — | ||||||
Balance at end of year | (98,326 | ) | (99,465 | ) | ||||
NONCONTROLLING INTEREST | ||||||||
Balance at beginning of year | 8,377 | 4,539 | ||||||
Partner contributions | 355 | 573 | ||||||
Partner distributions | (11 | ) | (33 | ) | ||||
Loss attributable to noncontrolling interest | (1,367 | ) | (971 | ) | ||||
Balance at end of year | 7,354 | 4,108 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Balance at end of year | 3,059,514 | 3,694,776 | ||||||
2009 | 2008 | |||||||
Net Income (loss) | (47,695 | ) | 39,025 | |||||
Other comprehensive income (loss), net of tax | ||||||||
Change in unrealized gains on marketable securities, net | (16,663 | ) | (64,591 | ) | ||||
Foreign exchange adjustments | (110 | ) | 100 | |||||
Minimum pension liability adjustment | 1,710 | (527 | ) | |||||
Total other comprehensive income (loss) | (15,063 | ) | (65,018 | ) | ||||
Total comprehensive income (loss) attributable to American National Insurance Company and Subsidiaries | (62,758 | ) | (25,993 | ) | ||||
�� |
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Three Months Ended March 31, | ||||||||
2009 | 2008 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (47,695 | ) | $ | 39,025 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Realized losses on investments | 73,461 | 5,585 | ||||||
Amortization of discounts and premiums on bonds | 4,027 | 4,145 | ||||||
Capitalized interest on policy loans and mortgage loans | 2,483 | 1,348 | ||||||
Depreciation | 7,448 | 8,300 | ||||||
Interest credited to policy account balances | 81,588 | 67,147 | ||||||
Charges to policy account balances | (45,278 | ) | (47,775 | ) | ||||
Deferred federal income tax expense | 16,248 | 133 | ||||||
Deferral of policy acquisition costs | (110,489 | ) | (129,528 | ) | ||||
Amortization of deferred policy acquisition costs | 117,266 | 97,199 | ||||||
Equity in earnings of unconsolidated affiliates | (2,980 | ) | 11,766 | |||||
Changes in: | ||||||||
Policyholder funds liabilities | (29,035 | ) | 31,163 | |||||
Reinsurance ceded receivables | 30,211 | 4,714 | ||||||
Premiums due and other receivables | 15,038 | (3,801 | ) | |||||
Accrued investment income | (4,432 | ) | 3,537 | |||||
Current federal income tax liability | (22,473 | ) | 15,958 | |||||
Liability for retirement benefits | 1,573 | — | ||||||
Prepaid reinsurance premiums | 13,579 | (2,386 | ) | |||||
Other, net | 50,279 | 76,407 | ||||||
Net cash provided by (used in) operating activities | 150,819 | 182,937 | ||||||
INVESTING ACTIVITIES | ||||||||
Proceeds from sales of: | ||||||||
Bonds — available for sale | ||||||||
Stocks | 30,436 | 3,391 | ||||||
Other invested assets | 714 | 6,144 | ||||||
Proceeds from maturity of: | ||||||||
Bonds available-for-sale | 66,144 | 104,591 | ||||||
Bonds held-to-maturity | 247,684 | 227,542 | ||||||
Principal payments received on: | ||||||||
Mortgage loans | 30,108 | 39,194 | ||||||
Policy loans | 3,399 | 2,915 | ||||||
Purchases of investments: | ||||||||
Bonds available-for-sale | (41,812 | ) | (336,398 | ) | ||||
Bonds held-to-maturity | (355,643 | ) | (239,791 | ) | ||||
Stocks | (14,226 | ) | (69,030 | ) | ||||
Real estate | (12,641 | ) | (8,892 | ) | ||||
Mortgage loans | (65,628 | ) | (90,256 | ) | ||||
Policy loans | (4,465 | ) | (3,646 | ) | ||||
Other invested assets | (627 | ) | (11,460 | ) | ||||
(Increase) in short-term investments, net | (415,725 | ) | (154,306 | ) | ||||
(Increase) in investment in unconsolidated affiliates, net | (2,211 | ) | (21,466 | ) | ||||
(Increase) in property and equipment, net | (603 | ) | (3,635 | ) | ||||
Net cash (used in) investing activities | (535,096 | ) | (555,103 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Policyholders’ deposits to policy account balances | 798,744 | 676,889 | ||||||
Policyholders’ withdrawals from policy account balances | (339,544 | ) | (286,182 | ) | ||||
(Decrease) in notes payable | (705 | ) | (5,940 | ) | ||||
Dividends to stockholders | (20,536 | ) | (20,584 | ) | ||||
Net cash provided by financing activities | 437,959 | 364,183 | ||||||
NET INCREASE IN CASH | 53,682 | (7,983 | ) | |||||
Cash: | ||||||||
Beginning of the year | 66,096 | 134,069 | ||||||
End of the year | $ | 119,778 | $ | 126,086 | ||||
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• | Other-Than-Temporary impairment of investment securities; |
• | Deferred acquisition costs; |
• | Reserves; |
• | Reinsurance recoverable; |
• | Pension and postretirement benefit plans; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
March 31, 2009 | ||||||||||||||||
Debt Securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. Government and agencies | 96,024 | 2,383 | (8 | ) | 98,399 | |||||||||||
States and political subdivisions | 148,561 | 5,864 | (1,247 | ) | 153,178 | |||||||||||
Foreign governments | 4,614 | 1,230 | (1 | ) | 5,843 | |||||||||||
Public utilities | 394,169 | 2,742 | (14,969 | ) | 381,942 | |||||||||||
All other corporate bonds | 5,387,433 | 56,041 | (530,090 | ) | 4,913,384 | |||||||||||
Mortgage-backed securities | 754,279 | 23,305 | (62,810 | ) | 714,774 | |||||||||||
Total bonds held-to-maturity | 6,785,080 | 91,565 | (609,125 | ) | 6,267,520 | |||||||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. Government and agencies | 7,817 | 917 | — | 8,734 | ||||||||||||
States and political subdivisions | 577,005 | 11,063 | (7,394 | ) | 580,674 | |||||||||||
Foreign governments | 913 | — | (65 | ) | 848 | |||||||||||
Public utilities | 201,481 | 7,089 | (6,362 | ) | 202,208 | |||||||||||
All other corporate bonds | 3,016,477 | 32,461 | (396,373 | ) | 2,652,565 | |||||||||||
Mortgage-backed securities | 423,931 | 7,273 | (12,175 | ) | 419,029 | |||||||||||
Total bonds available-for-sale | 4,227,624 | 58,803 | (422,369 | ) | 3,864,058 | |||||||||||
Total debt securities | 11,012,704 | 150,368 | (1,031,494 | ) | 10,131,578 | |||||||||||
Marketable equity securities | ||||||||||||||||
Preferred stock | 60,359 | 1,321 | (12,100 | ) | 49,580 | |||||||||||
Common stock | 739,818 | 82,236 | (81,118 | ) | 740,936 | |||||||||||
Total marketable securities | 800,177 | 83,557 | (93,218 | ) | 790,516 | |||||||||||
Total investments in securities | 11,812,881 | 233,925 | (1,124,712 | ) | 10,922,094 | |||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
December 31, 2008 | ||||||||||||||||
Debt Securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. Government and agencies | 166,010 | 2,292 | (3 | ) | 168,299 | |||||||||||
States and political subdivisions | 157,907 | 4,662 | (1,611 | ) | 160,958 | |||||||||||
Foreign governments | 4,338 | 1,618 | — | 5,956 | ||||||||||||
Public utilities | 380,766 | 1,218 | (25,877 | ) | 356,107 | |||||||||||
All other corporate bonds | 5,204,056 | 47,954 | (512,509 | ) | 4,739,501 | |||||||||||
Mortgage-backed securities | 768,760 | 13,499 | (64,377 | ) | 717,882 | |||||||||||
Total bonds held-to-maturity | 6,681,837 | 71,243 | (604,377 | ) | 6,148,703 | |||||||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. Government and agencies | 8,027 | 1,063 | — | 9,090 | ||||||||||||
States and political subdivisions | 584,268 | 6,278 | (18,311 | ) | 572,235 | |||||||||||
Foreign governments | 916 | — | (87 | ) | 829 | |||||||||||
Public utilities | 206,499 | 7,222 | (9,791 | ) | 203,930 | |||||||||||
All other corporate bonds | 3,023,231 | 24,016 | (435,847 | ) | 2,611,400 | |||||||||||
Mortgage-backed securities | 436,619 | 4,475 | (17,741 | ) | 423,353 | |||||||||||
Total bonds available-for-sale | 4,259,560 | 43,054 | (481,777 | ) | 3,820,837 | |||||||||||
Total debt securities | 10,941,397 | 114,297 | (1,086,154 | ) | 9,969,540 | |||||||||||
Marketable equity securities | ||||||||||||||||
Preferred stock | 60,718 | 3,609 | (15,505 | ) | 48,822 | |||||||||||
Common stock | 820,908 | 115,692 | (83,070 | ) | 853,530 | |||||||||||
Total marketable securities | 881,626 | 119,301 | (98,575 | ) | 902,352 | |||||||||||
Total investments in securities | 11,823,023 | 233,598 | (1,184,729 | ) | 10,871,892 | |||||||||||
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Bonds Held-to-Maturity | Bonds Available-for-Sale | |||||||||||||||
Estimated Fair | Estimated Fair | |||||||||||||||
Amortized Cost | Value | Amortized Cost | Value | |||||||||||||
Due in one year or less | 212,109 | 212,629 | 136,132 | 135,980 | ||||||||||||
Due after one year through five years | 3,106,939 | 2,904,250 | 1,562,027 | 1,427,855 | ||||||||||||
Due after five years through ten years | 2,715,269 | 2,430,406 | 1,833,823 | 1,623,542 | ||||||||||||
Due after ten years | 744,913 | 717,785 | 685,366 | 671,136 | ||||||||||||
$ | 6,779,230 | $ | 6,265,070 | $ | 4,217,348 | $ | 3,858,513 | |||||||||
Without single maturity date | 5,850 | 2,450 | 10,276 | 5,545 | ||||||||||||
Total | $ | 6,785,080 | $ | 6,267,520 | $ | 4,227,624 | $ | 3,864,058 | ||||||||
Location of Gain (Loss) | Amount of Gain (Loss) Recognized | |||||||||
Derivatives Not Designated as Hedging | Recognized in Income on | in Income on Derivatives | ||||||||
Instruments Under FAS Statement 133 | Derivatives | March 31, 2009 | March 31, 2008 | |||||||
Equity Index Options | Investment Income | $ | (3,857 | ) | $ | (9,190 | ) | |||
Equity Index Annuity Embedded Derivative | Interest Credited to Policyholders | $ | 2,263 | $ | 9,997 |
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2009 | 2008 | |||||||
Bonds available-for-sale | 75,157 | (583 | ) | |||||
Preferred stocks | 1,117 | (6,829 | ) | |||||
Common stocks | (31,504 | ) | (98,756 | ) | ||||
Amortization of deferred policy acquisition costs | (29,635 | ) | 3,878 | |||||
15,135 | (102,290 | ) | ||||||
Provision (benefit) for federal income taxes | 5,297 | (35,802 | ) | |||||
Tax valuation allowance | 25,000 | — | ||||||
(15,162 | ) | (66,488 | ) | |||||
Change in unrealized gains of investments attributable to participating policyholders’ interest | (1,501 | ) | 1,897 | |||||
Total | (16,663 | ) | (64,591 | ) | ||||
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
March 31, 2009 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt Securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
U.S. Government and agencies | 8 | 8,554 | — | — | 8 | 8,554 | ||||||||||||||||||
States and political subdivisions | 774 | 13,609 | 473 | 6,305 | 1,247 | 19,914 | ||||||||||||||||||
Foreign governments | 1 | 110 | — | — | 1 | 110 | ||||||||||||||||||
Public utilities | 1,713 | 79,444 | 13,255 | 121,109 | 14,968 | 200,553 | ||||||||||||||||||
All other corporate bonds | 114,395 | 1,402,295 | 415,696 | 1,854,800 | 530,091 | 3,257,095 | ||||||||||||||||||
Mortgage-backed securities | 38,916 | 101,179 | 23,894 | 141,374 | 62,810 | 242,553 | ||||||||||||||||||
Total bonds held-to-maturity | 155,808 | 1,605,191 | 453,318 | 2,123,588 | 609,125 | 3,728,779 | ||||||||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
States and political subdivisions | 1,953 | 107,457 | 5,441 | 116,066 | 7,394 | 223,523 | ||||||||||||||||||
Foreign governments | — | — | 65 | 848 | 65 | 848 | ||||||||||||||||||
Public utilities | 4,569 | 78,765 | 1,794 | 34,542 | 6,363 | 113,307 | ||||||||||||||||||
All other corporate bonds | 132,461 | 896,070 | 263,911 | 1,167,852 | 396,372 | 2,063,922 | ||||||||||||||||||
Mortgage-backed securities | 3,751 | 43,618 | 8,424 | 70,357 | 12,175 | 113,975 | ||||||||||||||||||
Total bonds available-for-sale | 142,734 | 1,125,910 | 279,635 | 1,389,665 | 422,369 | 2,515,575 | ||||||||||||||||||
Total debt securities | 298,542 | 2,731,101 | 732,953 | 3,513,253 | 1,031,494 | 6,244,354 | ||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Preferred stock | 4,506 | 5,911 | 7,594 | 8,687 | 12,100 | 14,598 | ||||||||||||||||||
Common stock | 73,336 | 282,990 | 7,780 | 32,676 | 81,116 | 315,666 | ||||||||||||||||||
Total marketable securities | 77,842 | 288,901 | 15,374 | 41,363 | 93,216 | 330,264 | ||||||||||||||||||
Total investments in securities | 376,384 | 3,020,002 | 748,327 | 3,554,616 | 1,124,710 | 6,574,618 | ||||||||||||||||||
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Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
December 31, 2008 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt Securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
U.S. Government and agencies | 3 | 3,181 | — | — | 3 | 3,181 | ||||||||||||||||||
States and political subdivisions | 1,571 | 21,104 | 40 | 383 | 1,611 | 21,487 | ||||||||||||||||||
Public utilities | 13,951 | 249,289 | 11,926 | 67,505 | 25,877 | 316,794 | ||||||||||||||||||
All other corporate bonds | 267,069 | 2,443,246 | 240,508 | 860,680 | 507,577 | 3,303,926 | ||||||||||||||||||
Other | 4,932 | 25,197 | — | — | 4,932 | 25,197 | ||||||||||||||||||
Mortgage-backed securities | 51,899 | 173,371 | 12,478 | 74,270 | 64,377 | 247,641 | ||||||||||||||||||
Total bonds held-to-maturity | 339,425 | 2,915,388 | 264,952 | 1,002,838 | 604,377 | 3,918,226 | ||||||||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
States and political subdivisions | 14,285 | 269,042 | 4,026 | 34,572 | 18,311 | 303,614 | ||||||||||||||||||
Foreign governments | 19 | 107 | 67 | 723 | 86 | 830 | ||||||||||||||||||
Public utilities | 5,052 | 80,772 | 4,739 | 46,342 | 9,791 | 127,114 | ||||||||||||||||||
All other corporate bonds | 245,231 | 1,618,374 | 190,616 | 610,305 | 435,847 | 2,228,679 | ||||||||||||||||||
Mortgage-backed securities | 9,847 | 111,517 | 7,895 | 46,536 | 17,742 | 158,053 | ||||||||||||||||||
Total bonds available-for-sale | 274,434 | 2,079,812 | 207,343 | 738,478 | 481,777 | 2,818,290 | ||||||||||||||||||
Total debt securities | 613,859 | 4,995,200 | 472,295 | 1,741,316 | 1,086,154 | 6,736,516 | ||||||||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Preferred stock | 1,238 | 7,853 | 14,267 | 31,835 | 15,505 | 39,688 | ||||||||||||||||||
Common stock | 77,791 | 299,512 | 5,279 | 18,493 | 83,070 | 318,005 | ||||||||||||||||||
Total marketable securities | 79,029 | 307,365 | 19,546 | 50,328 | 98,575 | 357,693 | ||||||||||||||||||
Total investments in securities | 692,888 | 5,302,565 | 491,841 | 1,791,644 | 1,184,729 | 7,094,209 | ||||||||||||||||||
Investment Income | Gains/(Losses) on Investments | |||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Bonds | 151,446 | 152,328 | (6,868 | ) | 181 | |||||||||||
Preferred stocks | 938 | 1,204 | (1,620 | ) | — | |||||||||||
Common stocks | 5,993 | 6,381 | (62,492 | ) | (6,491 | ) | ||||||||||
Mortgage loans | 31,976 | 25,539 | — | — | ||||||||||||
Real estate | 25,359 | 23,783 | (500 | ) | 1,594 | |||||||||||
Other invested assets | 4,374 | 2,900 | 336 | (515 | ) | |||||||||||
Investment in unconsolidated affiliates | — | — | — | — | ||||||||||||
220,086 | 212,135 | (71,144 | ) | (5,231 | ) | |||||||||||
Investment expenses | (26,890 | ) | (24,547 | ) | — | — | ||||||||||
Decrease (increase) in valuation allowances | — | — | (2,317 | ) | (354 | ) | ||||||||||
Total | 193,196 | 187,588 | (73,461 | ) | (5,585 | ) | ||||||||||
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March 31, | December 31, | |||||||
2009 | 2008 | |||||||
AAA | 15 | % | 17 | % | ||||
AA+ | 2 | % | 1 | % | ||||
AA | 3 | % | 6 | % | ||||
AA- | 5 | % | 4 | % | ||||
A+ | 7 | % | 11 | % | ||||
A | 15 | % | 16 | % | ||||
A- | 14 | % | 13 | % | ||||
BBB+ | 12 | % | 11 | % | ||||
BBB | 15 | % | 12 | % | ||||
BBB- | 5 | % | 4 | % | ||||
BB+ and below | 7 | % | 5 | % | ||||
100 | % | 100 | % | |||||
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
Consumer Goods | 21 | % | 20 | % | ||||
Financials | 13 | % | 16 | % | ||||
Energy & Utilities | 14 | % | 13 | % | ||||
Information Technology | 15 | % | 13 | % | ||||
Health Care | 12 | % | 13 | % | ||||
Mutual Funds | 11 | % | 10 | % | ||||
Industrials | 8 | % | 8 | % | ||||
Communications | 4 | % | 5 | % | ||||
Materials | 2 | % | 2 | % | ||||
100 | % | 100 | % | |||||
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Mortgage Loans | Investment Real Estate | |||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Office Buildings | 29 | % | 30 | % | 17 | % | 18 | % | ||||||||
Industrial | 26 | % | 25 | % | 44 | % | 45 | % | ||||||||
Shopping Centers | 21 | % | 21 | % | 23 | % | 23 | % | ||||||||
Hotels/Motels | 17 | % | 17 | % | 2 | % | 2 | % | ||||||||
Other | 4 | % | 4 | % | 12 | % | 11 | % | ||||||||
Commercial | 3 | % | 3 | % | 2 | % | 1 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
West South Central | 23 | % | 22 | % | 64 | % | 64 | % | ||||||||
East North Central | 22 | % | 22 | % | 7 | % | 6 | % | ||||||||
South Atlantic | 17 | % | 17 | % | 15 | % | 16 | % | ||||||||
Pacific | 12 | % | 13 | % | 3 | % | 2 | % | ||||||||
Middle Atlantic | 10 | % | 10 | % | — | — | ||||||||||
Mountain | 5 | % | 5 | % | — | 1 | % | |||||||||
New England | 4 | % | 5 | % | — | — | ||||||||||
East South Central | 4 | % | 4 | % | 10 | % | 10 | % | ||||||||
West North Central | 3 | % | 2 | % | 1 | % | 1 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
March 31, 2009 | December 31, 2008 | |||||||||||||||
Estimated Fair | Estimated Fair | |||||||||||||||
Carrying Amount | Value | Carrying Amount | Value | |||||||||||||
Financial Assets: | ||||||||||||||||
Bonds: | ||||||||||||||||
Held-to-maturity | $ | 6,785,080 | $ | 6,267,521 | $ | 6,681,837 | $ | 6,148,703 | ||||||||
Available-for-Sale | 3,864,058 | 3,864,058 | 3,820,837 | 3,820,837 | ||||||||||||
Preferred Stock | 49,580 | 49,580 | 48,822 | 48,822 | ||||||||||||
Common Stock | 740,936 | 740,936 | 853,530 | 853,530 | ||||||||||||
Options | 5,241 | 5,241 | 6,157 | 6,157 | ||||||||||||
Mortgage Loans on real estate | 1,909,598 | 1,910,117 | 1,877,053 | 1,891,895 | ||||||||||||
Policy Loans | 355,010 | 355,010 | 354,398 | 354,398 | ||||||||||||
Short-term Investments | 710,895 | 710,895 | 295,170 | 295,170 | ||||||||||||
Financial Liabilities: | ||||||||||||||||
Investment contracts | 6,991,867 | 6,991,867 | 6,626,561 | 6,626,561 | ||||||||||||
Liability for embedded derivatives of equity indexed annuties | 5,290 | 5,290 | 6,208 | 6,208 | ||||||||||||
Notes Payable | 111,217 | 111,217 | 111,922 | 111,922 |
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Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. American National defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | ||
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect American National’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
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Fair Value Measurement at March 31, 2009 Using: | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | Significant | ||||||||||||||
Markets for | Other | Unobservable | ||||||||||||||
Fair Value at | Identical Assets | Observable | Inputs | |||||||||||||
March 31, 2009 | (Level 1) | Inputs (Level 2) | (Level 3) | |||||||||||||
Financial Assets: | ||||||||||||||||
Bonds | $ | 10,134,070 | $ | — | $ | 10,076,162 | $ | 57,908 | ||||||||
Preferred stocks | 49,580 | 19,160 | — | 30,420 | ||||||||||||
Common stocks | 740,936 | 740,936 | — | — | ||||||||||||
Options | 5,241 | — | — | 5,241 | ||||||||||||
Short-term investments | 710,895 | — | 710,895 | — | ||||||||||||
Mortgage Loans | 1,910,117 | — | 1,910,117 | — | ||||||||||||
Total | $ | 13,550,839 | $ | 760,096 | $ | 12,697,174 | $ | 93,569 | ||||||||
Financial Liabilities: | ||||||||||||||||
Liability for embedded derivatives of equity indexed annuities | $ | 5,290 | — | — | $ | 5,290 |
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Fair Value Measurements Using Significant | ||||
Unobservable Inputs | ||||
Level 3 Totals | ||||
Beginning Balance | $ | 84,148 | ||
Net losses included in other comprehensive income (loss) | 6,063 | |||
Net fair value change for derivatives included in net income (loss) | (387 | ) | ||
Purchases, sales, and settlements of derivatives (net) | (856 | ) | ||
Transfers into Level 3 | 165 | |||
Transfers (out) of Level 3 | (854 | ) | ||
Ending balance | 88,279 | |||
Fair Value | ||||||||||||||||
at March | ||||||||||||||||
31, 2009 | Level 1 | Level 2 | Level 3 | |||||||||||||
Bonds held-to-maturity | $ | 230 | $ | — | $ | 230 | $ | — | ||||||||
Total | $ | 230 | — | $ | 230 | — | ||||||||||
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Life | Accident | Property & | ||||||||||||||
& Annuity | & Health | Casualty | Total | |||||||||||||
Balance at December 31, 2008 | $ | 1,269,308 | $ | 74,870 | $ | 138,486 | $ | 1,482,664 | ||||||||
Additions | 48,722 | 4,477 | 57,284 | 110,483 | ||||||||||||
Amortization | (36,575 | ) | (6,939 | ) | (60,336 | ) | (103,850 | ) | ||||||||
Effect of change in unrealized loss on available-for-sale securities | (29,638 | ) | — | — | (29,638 | ) | ||||||||||
Net change | (17,491 | ) | (2,462 | ) | (3,052 | ) | (23,005 | ) | ||||||||
Balance at March 31, 2009 | $ | 1,251,817 | $ | 72,408 | $ | 135,434 | $ | 1,459,659 | ||||||||
Premiums for the three months ended: | ||||||||||||||||
March 31, 2009 | $ | 107,306 | $ | 79,922 | $ | 292,489 | $ | 479,717 | ||||||||
March 31, 2008 | $ | 118,454 | $ | 72,037 | $ | 300,106 | $ | 490,597 | ||||||||
2009 | 2008 | |||||||
Balance at January 1 | $ | 1,310,272 | $ | 1,256,698 | ||||
Less reinsurance recoverables | 377,692 | 363,140 | ||||||
Net beginning balance | 932,580 | 893,558 | ||||||
Incurred related to: | ||||||||
Current year | 302,953 | 303,819 | ||||||
Prior years | (4,223 | ) | (32,576 | ) | ||||
Total incurred | 298,730 | 271,243 | ||||||
Paid related to: | ||||||||
Current year | 111,393 | 106,351 | ||||||
Prior years | 171,893 | 158,419 | ||||||
Total paid | 283,286 | 264,770 | ||||||
Net balance at March 31 | 948,024 | 900,031 | ||||||
Plus reinsurance recoverables | 350,359 | 351,880 | ||||||
Balance at March 31 | $ | 1,298,383 | $ | 1,251,911 | ||||
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For the three months ended | ||||||||||||||||
March 31, 2009 | March 31, 2008 | |||||||||||||||
Amount | Rate | Amount | Rate | |||||||||||||
Income tax on pre-tax income | $ | (26,873 | ) | 35.0 | % | $ | 14,559 | 35.0 | % | |||||||
Tax-exempt investment income | (2,323 | ) | 2.9 | (2,047 | ) | (3.8 | ) | |||||||||
Dividend exclusion | (4,730 | ) | 5.9 | (1,686 | ) | (3.2 | ) | |||||||||
Miscellaneous tax credits, net | (1,551 | ) | 1.9 | (640 | ) | (1.2 | ) | |||||||||
Other items, net | 4,454 | (5.6 | ) | 34 | 0.1 | |||||||||||
$ | (31,023 | ) | 40.1 | % | $ | 10,220 | 26.9 | % | ||||||||
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March 31, | December 31, | |||||||
2009 | 2008 | |||||||
DEFERRED TAX ASSETS: | ||||||||
Marketable securities, principally due to impairment losses | $ | 158,750 | $ | 138,455 | ||||
Marketable securities, principally due to net unrealized (gains) losses | 130,773 | 146,192 | ||||||
Investment in real estate and other invested assets, principally due to investment valuation allowances | 2,039 | 1,279 | ||||||
Policyholder funds, principally due to policy reserve discount | 181,250 | 187,277 | ||||||
Policyholder funds, principally due to unearned premium reserve | 31,454 | 30,716 | ||||||
Non-qualified pension | 28,113 | 27,630 | ||||||
Participating policyholders’ surplus | 26,946 | 28,615 | ||||||
Pension | 37,104 | 36,968 | ||||||
Commissions and other expenses | 24,367 | 24,395 | ||||||
Other assets | 9,148 | 8,518 | ||||||
Total gross deferred tax assets | $ | 629,944 | $ | 630,045 | ||||
Less valuation allowance | (25,000 | ) | — | |||||
Net deferred tax assets | $ | 604,944 | $ | 630,045 | ||||
DEFERRED TAX LIABILITIES: | ||||||||
Investment in bonds, principally due to accrual of discount on bonds | (15,996 | ) | (18,221 | ) | ||||
Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods | (402,047 | ) | (410,939 | ) | ||||
Property, plant and equipment, principally due to difference between GAAP and tax depreciation methods | (5,729 | ) | (5,377 | ) | ||||
Net deferred tax liabilities | (423,772 | ) | (434,537 | ) | ||||
Total deferred tax | $ | 181,172 | $ | 195,508 | ||||
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Before | Federal | |||||||||||
Federal | Income Tax | Net of Federal | ||||||||||
Income Tax | Expense | Income Tax | ||||||||||
March 31, 2009 | ||||||||||||
Unrealized Gain (Loss) | $ | 44,770 | $ | 15,212 | $ | 29,558 | ||||||
Less: reclassification adjustment for net losses realized in net income | (71,109 | ) | (24,888 | ) | (46,221 | ) | ||||||
Net unrealized loss component of comprehensive income | $ | (26,339 | ) | $ | (9,676 | ) | $ | (16,663 | ) | |||
March 31, 2008 | ||||||||||||
Unrealized Gain (Loss) | $ | (106,168 | ) | $ | (45,669 | ) | $ | (60,499 | ) | |||
Less: reclassification adjustment for net losses realized in net income | (6,295 | ) | (2,203 | ) | (4,092 | ) | ||||||
Net unrealized loss component of comprehensive income | $ | (112,463 | ) | $ | (47,872 | ) | $ | (64,591 | ) | |||
March 31, | December 31, | March 31, | ||||||||||
2009 | 2008 | 2008 | ||||||||||
Common Stock | ||||||||||||
Shares issued | 30,832,449 | 30,832,449 | 30,832,449 | |||||||||
Treasury shares | 4,012,283 | 4,013,616 | 4,099,617 | |||||||||
Restricted shares | 321,334 | 339,001 | 253,000 | |||||||||
Unrestricted outstanding shares | 26,498,832 | 26,479,832 | 26,479,832 | |||||||||
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SAR Weighted- | RS Weighted- | |||||||||||||||
Average Price | Average Price | |||||||||||||||
SAR Shares | per Share | RS Shares | per Share | |||||||||||||
Outstanding at December 31, 2007 | 96,724 | $ | 97.84 | 253,000 | $ | 4.40 | ||||||||||
Granted | 96,917 | 115.92 | 86,001 | — | ||||||||||||
Exercised | (4,109 | ) | 81.30 | — | — | |||||||||||
Canceled | — | — | — | — | ||||||||||||
Outstanding at December 31, 2008 | 189,532 | $ | 107.44 | 339,001 | $ | 3.28 | ||||||||||
Granted | — | — | 20,333 | — | ||||||||||||
Exercised | — | — | (19,000 | ) | — | |||||||||||
Canceled | — | — | (19,000 | ) | — | |||||||||||
Outstanding at March 31, 2009 | 189,532 | $ | 107.44 | 321,334 | $ | — | ||||||||||
March 31, 2009 | December 31, 2008 | March 31, 2008 | ||||||||||
Unrestricted shares outstanding | 26,498,832 | 26,479,832 | 26,479,832 | |||||||||
Incremental shares from restricted stock | 108,084 | 137,625 | 161,249 | |||||||||
Total shares for diluted calculations | 26,606,916 | 26,617,457 | 26,641,081 | |||||||||
Diluted earnings (losses) per share | ($1.80 | ) | ($5.82 | ) | $ | 1.47 | ||||||
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• | The Life segment markets whole, term, universal and variable life insurance on a national basis primarily through employee and multiple line agents, direct marketing channels and independent third-party marketing organizations. | ||
• | The Annuity segment develops, sells and supports fixed, equity-indexed, and variable annuity products. These products are primarily sold through independent agents and brokers, but are also sold through financial institutions and multiple line agents. | ||
• | The Health segment’s primary lines of business are Medicare Supplement, medical expense, employer medical stop loss, true group, other supplemental health products and credit disability insurance. Health products are typically distributed through independent agents and Managing General Underwriters. | ||
• | The Property and Casualty segment writes auto, homeowners, agribusiness and credit related property insurance. These products are primarily sold through multiple line agents and independent agents. | ||
• | The Corporate and Other business segment consists of net investment income on the capital not allocated to the insurance lines and the operations of non-insurance lines of business. This segment also provides mutual fund products. |
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• | Net investment income from fixed income assets (bonds and mortgage loans) is allocated based on the funds generated by each line of business at the average yield available from these fixed income assets at the time such funds become available. | ||
• | Net investment income from all other assets is allocated to the operating segments in accordance with the amount of equity invested in each segment, with the remainder going to Corporate and Other. | ||
• | Expenses are allocated to the lines based upon various factors, including premium and commission ratios within the respective operating segments. | ||
• | Realized gains or losses on investments are allocated to Corporate and Other. | ||
• | Equity in earnings of unconsolidated affiliates are allocated to Corporate and Other. | ||
• | Federal income taxes have been applied to the net earnings of each segment based on a fixed tax rate. Any difference between the amount allocated to the segments and the total federal income tax amount is allocated to Corporate and Other. |
Property & | Corporate & | |||||||||||||||||||||||
(Three Months Ended March 31, 2009) | Life | Annuity | Health | Casualty | Other | TOTAL | ||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||
Premiums | $ | 70,090 | $ | 37,216 | $ | 79,922 | $ | 292,489 | $ | — | $ | 479,717 | ||||||||||||
Other policy revenues | 40,194 | 3,486 | — | — | — | 43,680 | ||||||||||||||||||
Net investment income | 55,289 | 99,832 | 4,025 | 16,818 | 17,232 | 193,196 | ||||||||||||||||||
Other income | 869 | (732 | ) | 2,928 | 2,030 | 3,770 | 8,865 | |||||||||||||||||
Total operating revenues | 166,442 | 139,802 | 86,875 | 311,337 | 21,002 | 725,458 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | (73,461 | ) | $ | (73,461 | ) | |||||||||||||||
Total revenues | 166,442 | 139,802 | 86,875 | 311,337 | (52,459 | ) | 651,997 | |||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||
Policy benefits | 73,949 | 43,657 | 64,067 | 248,074 | — | 429,747 | ||||||||||||||||||
Interest credited to policy account balances | 14,006 | 67,582 | — | — | — | 81,588 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 21,802 | 26,244 | 12,883 | 51,986 | — | 112,915 | ||||||||||||||||||
Other operating costs and expenses | 47,085 | 13,777 | 15,703 | 27,764 | 6,831 | 111,160 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (99 | ) | (12,048 | ) | 2,462 | 3,052 | — | (6,633 | ) | |||||||||||||||
Total benefits, losses and expenses | 156,743 | 139,212 | 95,115 | 330,876 | 6,831 | 728,777 | ||||||||||||||||||
Income / (loss) before other items and federal income taxes | 9,699 | 590 | (8,240 | ) | (19,539 | ) | (59,290 | ) | (76,780 | ) | ||||||||||||||
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Property & | Corporate & | |||||||||||||||||||||||
(Three Months Ended March 31, 2008) | Life | Annuity | Health | Casualty | Other | TOTAL | ||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||
Premiums | $ | 74,155 | $ | 44,299 | $ | 72,037 | $ | 300,106 | $ | — | $ | 490,597 | ||||||||||||
Other policy revenues | 36,809 | 5,257 | — | — | — | 42,066 | ||||||||||||||||||
Net investment income | 56,047 | 83,980 | 4,064 | 19,144 | 24,353 | 187,588 | ||||||||||||||||||
Other income | 871 | (2,319 | ) | 3,330 | 2,002 | 5,529 | 9,413 | |||||||||||||||||
Total operating revenues | 167,882 | 131,217 | 79,431 | 321,252 | 29,882 | 729,664 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | (5,585 | ) | $ | (5,585 | ) | |||||||||||||||
Total revenues | 167,882 | 131,217 | 79,431 | 321,252 | 24,297 | 724,079 | ||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||
Policy benefits | 71,966 | 49,750 | 60,579 | 217,611 | — | 399,906 | ||||||||||||||||||
Interest credited to policy account balances | 16,173 | 50,974 | — | — | — | 67,147 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 33,321 | 25,364 | 9,517 | 57,068 | — | 125,270 | ||||||||||||||||||
Other operating costs and expenses | 51,000 | 11,200 | 15,063 | 28,512 | 11,770 | 117,545 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (15,537 | ) | (11,251 | ) | 2,689 | (4,632 | ) | — | (28,731 | ) | ||||||||||||||
Total benefits, losses and expenses | 156,923 | 126,037 | 87,848 | �� | 298,559 | 11,770 | 681,137 | |||||||||||||||||
Income / (loss) before other items and federal income taxes | 10,959 | 5,180 | (8,417 | ) | 22,693 | 12,527 | 42,942 | |||||||||||||||||
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218
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Page | ||||
Number | ||||
(a)(1) Financial Statements (See Item 13: Financial Statements and Supplementary Data) | 151 | |||
(a)(2) Supplementary Data and Financial Statement Schedules |
Page | ||||
Number | ||||
Independent Auditors Report | 221 | |||
I — Summary of Investments — Other than Investments in Related Parties, December 31, 2008 | 222 | |||
II — Condensed Financial Information of Registrant, Years ended December 31, 2008, 2007 and 2006 | 223 | |||
III — Supplementary Insurance Information, Years ended December 31, 2008, 2007 and 2006 | 227 | |||
IV — Reinsurance Information, Years ended December 31, 2008, 2007 and 2006 | 228 | |||
V — Valuation and Qualifying Accounts, Years ended December 31, 2008, 2007 and 2006 | 229 |
Exhibit | ||
Number: | Basic Documents: | |
3.1 | Articles of Incorporation (previously filed) | |
3.2 | Bylaws (previously filed) | |
4.1 | Specimen copy of Stock Certificate (previously filed) | |
10.1 | Administrative Services Agreement dated October 17, 2007 by and between American National Insurance Company and Transaction Applications Group, Inc. (previously filed) | |
10.2 | American National Insurance Company Amended and Restated 1999 Stock and Incentive Plan (the “Stock and Incentive Plan”) (previously filed) | |
10.3 | Form of Restricted Stock Agreement for Directors under the Stock and Incentive Plan (previously filed) | |
10.4 | Form of Restricted Stock Agreement for Employees under the Stock and Incentive Plan (previously filed) | |
10.5 | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan (previously filed) | |
10.6 | American National Insurance Company Nonqualified Retirement Plan for Certain Salaried Employees (previously filed) | |
10.7 | American National Insurance Company Nonqualified Retirement Plan (previously filed) | |
11 | Statement re: Computation of Per Share Earnings — See Note 13 to the Consolidated Financial Statements | |
21 | Subsidiaries (previously filed) | |
23 | Consent of Independent Registered Public Accounting Firm | |
99.1 | Press Release (to be filed by amendment) |
219
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American National Insurance Company | ||||
Date: May 29, 2009 | By: | /s/ G. Richard Ferdinandtsen | ||
President and Chief Operating Officer | ||||
220
Table of Contents
American National Insurance Company:
Houston, Texas
April 9, 2009
221
Table of Contents
(IN THOUSANDS)
Column A | Column B | Column C | Column D | |||||||||
Amount at Which | ||||||||||||
Market | Shown in the | |||||||||||
Type of Investment | Cost (a) | Value | Balance Sheet | |||||||||
Fixed Maturities: | ||||||||||||
Bonds Held-to-Maturity: | ||||||||||||
United States Government and government agencies and authorities | $ | 166,010 | $ | 168,299 | $ | 166,010 | ||||||
States, municipalities and political subdivisions | 157,907 | 160,958 | 157,907 | |||||||||
Foreign governments | 4,338 | 5,956 | 4,338 | |||||||||
Public utilities | 380,766 | 356,107 | 380,766 | |||||||||
All other corporate bonds | 5,972,816 | 5,457,382 | 5,972,816 | |||||||||
Bonds Available-for-Sale: | ||||||||||||
United States Government and government agencies and authorities | 8,027 | 9,090 | 9,090 | |||||||||
States, municipalities and political subdivisions | 584,268 | 572,235 | 572,235 | |||||||||
Foreign governments | 916 | 829 | 829 | |||||||||
Public utilities | 206,499 | 203,930 | 203,930 | |||||||||
All other corporate bonds | 3,459,850 | 3,034,753 | 3,034,753 | |||||||||
Redeemable preferred stock | 60,718 | 48,822 | 48,822 | |||||||||
Total fixed maturities | $ | 11,002,115 | $ | 10,018,361 | $ | 10,551,496 | ||||||
Equity Securities: | ||||||||||||
Common stocks: | ||||||||||||
Public utilities | $ | 34,640 | $ | 35,284 | $ | 35,284 | ||||||
Banks, trust and insurance companies | 127,482 | 132,251 | 132,251 | |||||||||
Industrial, miscellaneous and all other | 571,954 | 600,883 | 600,883 | |||||||||
Investments in Mutual Funds | 86,832 | 85,112 | 85,112 | |||||||||
Total equity securities | $ | 820,908 | $ | 853,530 | $ | 853,530 | ||||||
Mortgage loans on real estate | $ | 1,877,053 | $ | 1,877,053 | ||||||||
Investment real estate | 516,224 | 516,224 | ||||||||||
Real estate acquired in satisfaction of debt | 12,681 | 12,681 | ||||||||||
Policy loans | 354,398 | 354,398 | ||||||||||
Other long-term investments | 78,994 | $ | 6,157 | 85,151 | ||||||||
Short-term investments | 295,170 | 295,170 | ||||||||||
Total investments | $ | 14,957,543 | $ | 10,878,048 | $ | 14,545,703 | ||||||
(a) | Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and valuation write-downs and adjusted for amortization of premiums or accrual of discounts. |
222
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(Parent Company Only)
(IN THOUSANDS)
For the year ended December 31, | 2008 | 2007 | 2006 | |||||||||
REVENUES | ||||||||||||
Premium and Policy Revenue | $ | 691,885 | $ | 790,666 | $ | 675,251 | ||||||
Net Investment Income | 643,855 | 641,951 | 638,870 | |||||||||
Net Realized Investment gains (losses) | (143,239 | ) | 1,476 | 10,889 | ||||||||
Other Revenues | 6,576 | 11,840 | 15,097 | |||||||||
Total Revenues | $ | 1,199,077 | $ | 1,445,933 | $ | 1,340,107 | ||||||
EXPENSES | ||||||||||||
Benefits | $ | 471,590 | $ | 556,543 | $ | 457,456 | ||||||
Operating Costs & Other Expenses | 771,899 | 704,339 | 703,967 | |||||||||
Total Expenses | $ | 1,243,489 | $ | 1,260,882 | $ | 1,161,423 | ||||||
Income/(loss) from continuing operations before federal income tax, and equity in earnings of unconsilidated affiliates | $ | (44,412 | ) | $ | 185,051 | $ | 178,684 | |||||
Income tax expense/(benefit) | $ | (30,820 | ) | $ | 68,612 | $ | 67,689 | |||||
Equity in net income/(loss) of subsidiaries | (159,134 | ) | 129,292 | 167,846 | ||||||||
Income/(loss) from continuing operations | $ | (172,726 | ) | $ | 245,731 | $ | 278,841 | |||||
Income/(loss) from discontinued operations | $ | 18,728 | $ | (4,958 | ) | $ | (5,610 | ) | ||||
Net income/(loss) | $ | (153,998 | ) | $ | 240,773 | $ | 273,231 | |||||
the consolidated financial statements and notes therein
223
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(Parent Company Only)
(IN THOUSANDS)
For the year ended December 31, | 2008 | 2007 | 2006 | |||||||||
ASSETS | ||||||||||||
Fixed Maturities | $ | 7,449,385 | $ | 7,419,242 | $ | 7,266,062 | ||||||
Equity Securities | 71,925 | 108,319 | 104,382 | |||||||||
Mortgage Loans on Real Estate | 1,915,801 | 1,578,164 | 1,421,890 | |||||||||
Other Invested Assets | 1,681,122 | 1,963,657 | 1,928,318 | |||||||||
Investment in subsidiaries | 1,470,589 | 1,752,785 | 1,644,853 | |||||||||
Deferred Policy Acquisition Costs | 1,175,427 | 959,572 | 898,602 | |||||||||
Other Assets | 1,266,726 | 1,515,479 | 1,452,778 | |||||||||
Total assets | $ | 15,030,975 | $ | 15,297,218 | $ | 14,716,885 | ||||||
LIABILITIES | ||||||||||||
Policyowner Funds | $ | 2,577,472 | $ | 2,523,718 | $ | 2,361,716 | ||||||
Policy Account Balances | 7,690,775 | 7,039,341 | 6,913,377 | |||||||||
Separate Account Liabilities | 561,021 | 781,160 | 649,571 | |||||||||
Other Liabilities | 1,067,851 | 1,216,215 | 1,216,598 | |||||||||
Total Liabilities | $ | 11,897,119 | $ | 11,560,434 | $ | 11,141,262 | ||||||
SHAREHOLDERS EQUITY | ||||||||||||
Capital Stock | $ | 30,832 | $ | 30,832 | $ | 30,832 | ||||||
Additional Paid-In Capital | 7,552 | 6,080 | 4,160 | |||||||||
Other Accumulated Comprehensive Income | (253,409 | ) | 145,972 | 141,869 | ||||||||
Retained Earnings | 3,447,207 | 3,653,365 | 3,498,306 | |||||||||
Less: Treasury Stock at Cost | (98,326 | ) | (99,465 | ) | (99,544 | ) | ||||||
Total Stockholders’ Equity | $ | 3,133,856 | $ | 3,736,784 | $ | 3,575,623 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 15,030,975 | $ | 15,297,218 | $ | 14,716,885 | ||||||
the consolidated financial statements and notes therein
224
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(Parent Company Only)
(IN THOUSANDS)
For the year ended December 31, | 2008 | 2007 | 2006 | |||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income (loss) | $ | (153,998 | ) | 240,773 | 273,231 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Realized loss (gain) on investments | 143,239 | (1,476 | ) | (10,889 | ) | |||||||
Amortization of discounts and premiums on bonds | 10,345 | 11,153 | 11,312 | |||||||||
Capitalized interest on policy loans and mortgage loans | 5,896 | 190 | 7,231 | |||||||||
Depreciation | 16,885 | 18,176 | 22,286 | |||||||||
Interest credited to policy account balances | 272,700 | 267,228 | 269,135 | |||||||||
Charges to policy account balances | (165,354 | ) | (145,386 | ) | (130,312 | ) | ||||||
Deferred federal income tax (benefit) expense | (87,389 | ) | 25,539 | 10,584 | ||||||||
Deferral of policy acquisition costs | (437,287 | ) | (270,904 | ) | (218,020 | ) | ||||||
Amortization of deferred policy acquisition costs | 221,432 | 209,934 | 208,852 | |||||||||
Equity in earnings of unconsolidated affiliates | 210,114 | (164,100 | ) | (223,350 | ) | |||||||
Changes in: | ||||||||||||
Policyholder fund liabilities | 49,821 | 121,284 | 8,920 | |||||||||
Reinsurance ceded receivable | (26,654 | ) | 6,270 | 20,294 | ||||||||
Premiums due and other receivables | 20,454 | (21,522 | ) | 65,602 | ||||||||
Accrued investment income | (878 | ) | (6,969 | ) | 8,590 | |||||||
Current federal income tax (asset) liability | (94,955 | ) | 1,340 | 13,075 | ||||||||
Liability for retirement benefits | 52,263 | 900 | 24,267 | |||||||||
Prepaid Reinsurance Premiums | 6,682 | 6,203 | 12,793 | |||||||||
Other, net | (21,103 | ) | 67,015 | (24,768 | ) | |||||||
Net cash provided by (used in) operating activities | 22,213 | 365,648 | 348,833 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Proceeds from sales of: | ||||||||||||
Bonds | 14,654 | 283,085 | 126,611 | |||||||||
Stocks | 55,084 | 4,934 | 246 | |||||||||
Real estate | — | 31,810 | 56,120 | |||||||||
Mortgage loans | — | — | — | |||||||||
Other invested assets | 188,493 | 80,213 | 221,545 | |||||||||
Proceeds from maturity of: | ||||||||||||
Bonds | 624,288 | 453,765 | 528,293 | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 145,214 | 234,165 | 158,028 | |||||||||
Policy loans | 9,203 | 9,217 | 6,101 | |||||||||
Purchases of: | ||||||||||||
Bonds | (1,118,416 | ) | (908,103 | ) | (256,884 | ) | ||||||
Stocks | (47,002 | ) | (13,736 | ) | (5,349 | ) | ||||||
Real estate | (15,657 | ) | (22,686 | ) | (10,758 | ) | ||||||
Mortgage loans | (478,429 | ) | (368,223 | ) | (310,778 | ) | ||||||
Policy loans | (18,165 | ) | (16,363 | ) | (14,432 | ) | ||||||
Other invested assets | (216,468 | ) | (118,365 | ) | (119,645 | ) | ||||||
Decrease (increase) in short term investments, net | 294,048 | (17,032 | ) | (531,157 | ) | |||||||
Decrease (increase) in investment in unconsolidated affiliates | 72,082 | 56,168 | 24,531 | |||||||||
Increase (decrease) in property & equipment, net | (10,462 | ) | (3,000 | ) | (4,669 | ) | ||||||
Net cash provided by (used in) investing activities | (501,533 | ) | (314,151 | ) | (132,197 | ) | ||||||
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(Parent Company Only)
(IN THOUSANDS)
For the year ended December 31, | 2008 | 2007 | 2006 | |||||||||
FINANCING ACTIVITIES | ||||||||||||
Policyholders’ deposits to policy account balances | $ | 1,931,709 | $ | 1,164,863 | $ | 1,028,328 | ||||||
Policyholders’ withdrawals from policy account balances | (1,385,625 | ) | (1,163,120 | ) | (1,123,691 | ) | ||||||
Increase (decrease) in notes payable | ||||||||||||
Dividends to stockholders | (82,651 | ) | (81,531 | ) | (80,448 | ) | ||||||
Net cash provided by (used in) financing activities | $ | 463,433 | $ | (79,788 | ) | $ | (175,811 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $ | (15,887 | ) | $ | (28,291 | ) | $ | 40,825 | ||||
Cash and cash equivalents: | ||||||||||||
Beginning of the year | $ | 7,908 | $ | 36,199 | $ | (4,626 | ) | |||||
End of the year | $ | (7,979 | ) | $ | 7,908 | $ | 36,199 |
the consolidated financial statements and notes therein
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Column A | Column B | Column C | Column D | Column E | Column F | Column G | Column H | Column I | Column J | Column K | ||||||||||||||||||||||||||||||
Future Policy | Benefits, | Amortization | ||||||||||||||||||||||||||||||||||||||
Deferred | Benefits, | Other Policy | Claims, Losses | of Deferred | ||||||||||||||||||||||||||||||||||||
Policy | Losses, Claims | Claims and | Net | and | Policy | Other | ||||||||||||||||||||||||||||||||||
Acquisition | and Loss | Unearned | Benefits | Premium | Investment | Settlement | Acquisition | Operating | Premiums | |||||||||||||||||||||||||||||||
Segment | Cost | Expenses | Premiums | Payable | Revenue | Income (a) | Expenses | Costs | Expenses (b) | Written | ||||||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||||||||||
Corporate & Other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 109,597 | $ | — | $ | — | $ | 37,839 | $ | — | ||||||||||||||||||||
Life | 712,234 | 3,763,207 | 111,846 | 220,691 | 299,338 | 226,643 | 251,992 | 86,956 | 220,662 | — | ||||||||||||||||||||||||||||||
Annuities | 557,061 | 7,631,985 | 13 | 52,126 | 116,248 | 374,023 | 157,102 | 75,826 | 28,188 | — | ||||||||||||||||||||||||||||||
Health | 74,887 | 97,020 | 93,956 | 439,621 | 290,883 | 16,566 | 220,848 | 27,785 | 90,418 | — | ||||||||||||||||||||||||||||||
Property & Casualty | 138,482 | — | 816,249 | 776,562 | 1,182,026 | 69,348 | 939,854 | 233,336 | 115,696 | 1,184,686 | ||||||||||||||||||||||||||||||
Total | $ | 1,482,664 | $ | 11,492,212 | $ | 1,022,064 | $ | 1,489,000 | $ | 1,888,495 | $ | 796,177 | $ | 1,569,796 | $ | 423,903 | $ | 492,803 | $ | 1,184,686 | ||||||||||||||||||||
2007 | ||||||||||||||||||||||||||||||||||||||||
Corporate & Other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 127,519 | $ | — | $ | 198 | $ | 60,871 | $ | — | ||||||||||||||||||||
Life | 641,780 | 3,762,745 | 122,052 | 233,691 | 315,893 | 229,092 | 239,598 | 1,040,208 | (755,996 | ) | — | |||||||||||||||||||||||||||||
Annuities | 400,678 | 6,913,285 | 13 | 51,332 | 222,748 | 364,607 | 150,318 | 70,740 | 22,014 | — | ||||||||||||||||||||||||||||||
Health | 80,012 | 94,072 | 104,005 | 422,948 | 283,765 | 16,710 | 212,692 | 24,508 | 78,583 | — | ||||||||||||||||||||||||||||||
Property & Casualty | 128,815 | — | 698,860 | 852,455 | 1,177,217 | 75,041 | 818,230 | 224,499 | 95,610 | 1,191,113 | ||||||||||||||||||||||||||||||
Total | 1,251,285 | $ | 10,770,102 | $ | 924,930 | $ | 1,560,426 | $ | 1,999,623 | $ | 812,969 | $ | 1,420,838 | $ | 1,360,153 | $ | (498,918 | ) | $ | 1,191,113 | ||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||||||||||||||
Corporate & Other | — | $ | — | $ | — | $ | — | $ | — | $ | 159,723 | $ | — | $ | 180 | $ | 65,227 | $ | — | |||||||||||||||||||||
Life | $ | 580,616 | 3,686,851 | 129,536 | 248,649 | 327,594 | 231,414 | 248,428 | 89,907 | 196,690 | — | |||||||||||||||||||||||||||||
Annuities | 399,316 | 6,691,696 | 23 | 51,440 | 112,455 | 353,157 | 130,830 | 68,642 | 21,938 | — | ||||||||||||||||||||||||||||||
Health | 86,771 | 98,034 | 110,460 | 445,011 | 303,285 | 18,964 | 227,329 | 22,929 | 86,998 | — | ||||||||||||||||||||||||||||||
Property & Casualty | $ | 121,176 | — | 701,680 | 863,717 | 1,234,300 | 72,759 | 881,806 | 237,865 | 97,237 | 1,284,456 | |||||||||||||||||||||||||||||
Total | 1,187,879 | $ | 10,476,581 | $ | 941,699 | $ | 1,608,817 | $ | 1,977,634 | $ | 836,017 | $ | 1,488,393 | $ | 419,523 | $ | 468,090 | $ | 1,284,456 | |||||||||||||||||||||
(a) | Net investment income from fixed income assets (bonds and mortgage loans on real estate) is allocated to insurance lines based on the funds generated by each line at the average yield available from these fixed income assets at the time such funds become available. Net investment income from policy loans is allocated to the insurance lines according to the amount of loans made by each line. Net investment income from all other assets is allocated to the insurance lines as necessary to support the equity assigned to that line with the remainder allocated to capital & surplus. | |
(b) | Identifiable commissions and expenses are charged directly to the appropriate line of business. The remaining expenses are allocated to the lines based upon various factors including premium and commission ratios within the respective lines. |
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(IN THOUSANDS)
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Percentage | ||||||||||||||||||||
Ceded to | Assumed | of Amount | ||||||||||||||||||
Gross | Other | from Other | Net | Assumed | ||||||||||||||||
Amount | Companies | Companies | Amount | to Net | ||||||||||||||||
2008 | ||||||||||||||||||||
Life insurance in force | $ | 68,820,212 | $ | 31,241,255 | $ | 1,050,645 | $ | 38,629,602 | 2.7 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 492,068 | 84,942 | 8,460 | 415,586 | 2.0 | % | ||||||||||||||
Accident and health insurance | 278,907 | 134,904 | 146,880 | 290,883 | 50.5 | % | ||||||||||||||
Property and liability insurance | 1,346,425 | 224,248 | 59,849 | 1,182,026 | 5.1 | % | ||||||||||||||
Total premiums | $ | 2,117,400 | $ | 444,094 | $ | 215,189 | $ | 1,888,495 | 11.4 | % | ||||||||||
2007 | ||||||||||||||||||||
Life insurance in force | $ | 67,604,695 | $ | 29,635,648 | $ | 1,078,371 | $ | 39,047,418 | 2.8 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 609,643 | 72,604 | 10,355 | 547,394 | 1.9 | % | ||||||||||||||
Accident and health insurance | 255,948 | 126,417 | 154,234 | 283,765 | 54.4 | % | ||||||||||||||
Property and liability insurance | 1,269,078 | 103,629 | 11,768 | 1,177,217 | 1.0 | % | ||||||||||||||
Total premiums | $ | 2,134,669 | $ | 302,650 | $ | 176,357 | $ | 2,008,376 | 8.8 | % | ||||||||||
2006 | ||||||||||||||||||||
Life insurance in force | $ | 65,008,408 | $ | 26,557,877 | $ | 982,412 | $ | 39,432,943 | 2.5 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 504,225 | 65,726 | 10,646 | 449,145 | 2.4 | % | ||||||||||||||
Accident and health insurance | 312,694 | 178,195 | 168,786 | 303,285 | 55.7 | % | ||||||||||||||
Property and liability insurance | 1,300,803 | 85,187 | 18,684 | 1,234,300 | 1.5 | % | ||||||||||||||
Total premiums | $ | 2,117,722 | $ | 329,108 | $ | 198,116 | $ | 1,986,730 | 10.0 | % | ||||||||||
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Column A | Column B | Column C | Column D | Column E | ||||||||||||||||
Deductions - Describe | ||||||||||||||||||||
Balance at | Additions | Amounts | Balance at | |||||||||||||||||
Beginning of | Charged to | Written off Due | Amounts | End of | ||||||||||||||||
Description | Period | Expense | to Disposal (a) | Commuted (b) | Period | |||||||||||||||
2008 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 15,610 | $ | 3,886 | $ | — | $ | — | $ | 19,496 | ||||||||||
Investment real estate | 11,194 | — | — | 11,194 | ||||||||||||||||
Total | $ | 26,804 | $ | 3,886 | $ | — | $ | — | $ | 30,690 | ||||||||||
2007 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 13,835 | $ | 1,775 | $ | — | $ | — | $ | 15,610 | ||||||||||
Investment real estate | 11,194 | — | — | 11,194 | ||||||||||||||||
Total | $ | 25,029 | $ | 1,775 | $ | — | $ | — | $ | 26,804 | ||||||||||
2006 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 14,444 | $ | — | $ | — | $ | 581 | $ | 13,863 | ||||||||||
Investment real estate | 17,870 | (7,049 | ) | — | (373 | ) | 11,194 | |||||||||||||
Total | $ | 32,314 | $ | (7,049 | ) | $ | — | $ | 208 | $ | 25,057 | |||||||||
(a) | Amounts written off due to disposal represent reductions or (additions) in the balance due to sales, transfers or other disposals of the asset with which the allowance is associated. | |
(b) | Amounts commuted represent reductions in the allowance balance due to changes in requirements or investment conditions. |
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Exhibit | ||
Number: | Basic Documents: | |
3.1 | Articles of Incorporation (previously filed) | |
3.2 | Bylaws (previously filed) | |
4.1 | Specimen copy of Stock Certificate (previously filed) | |
10.1 | Administrative Services Agreement dated October 17, 2007 by and between American National Insurance Company and Transaction Applications Group, Inc. (previously filed) | |
10.2 | American National Insurance Company Amended and Restated 1999 Stock and Incentive Plan (the “Stock and Incentive Plan”) (previously filed) | |
10.3 | Form of Restricted Stock Agreement for Directors under the Stock and Incentive Plan (previously filed) | |
10.4 | Form of Restricted Stock Agreement for Employees under the Stock and Incentive Plan (previously filed) | |
10.5 | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan (previously filed) | |
10.6 | American National Insurance Company Nonqualified Retirement Plan for Certain Salaried Employees (previously filed) | |
10.7 | American National Insurance Company Nonqualified Retirement Plan (previously filed) | |
11 | Statement re: Computation of Per Share Earnings — See Note 13 to the Consolidated Financial Statements | |
21 | Subsidiaries (previously filed) | |
23 | Consent of Independent Registered Public Accounting Firm | |
99.1 | Press Release (to be filed by amendment) |
230